Life insurance (or commonly life assurance, especially in the Commonwealth) is a contract between an insured (insurance policy holder) and an insurer or
assurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") in exchange for a premium, upon the death of the insured

Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either
regularly or as one lump sum.

Other expenses (such as funeral expenses) can also be included in the benefits.

Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the
contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil commotion.

The primary types of Life Insurance are:
  • Term
  • Whole Life
  • Universal

How much life insurance do you actually need? Statistics drive insurance, such as how long a person is likely to live. Much simpler math helps you figure out
how much coverage you need.

If someone depends on you financially, you need to have life insurance.

A good conservative estimate for the yearly income that a lump sum generates is 4%. For instance, if you leave your partner $1 million of life insurance, that
produces about $40,000 of annual income for the rest of your loved one’s life. This assumes the income grows with inflation each year and your partner has a
low chance of ever running out of money.

Determine how much income your partner needs to maintain his or her standard of living if you die tomorrow. Now multiple that number by 25.

That’s how much total money you need to leave your partner to provide for the person financially. Included in this total are your investment accounts, savings
and retirement plans. Don’t include your home, since it is hard to get income out of the value of real estate.

At the very least, you want to leave enough money so that your partner isn’t worried about how to pay the bills after your death.

The more money you leave helps protect the spouse for a longer time. This has to be balanced with the cost of the life insurance today.
Having the right life insurance is pivotal in planning for the future of you and your loved ones. Life insurance can help you fulfill promises you’ve made your
family when you are gone. Don’t leave the future of you and your loved ones to chance.
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