American Express

Archive for the ‘Life Insurance’ Category

For many people, life insurance is probably the most unpleasant type of insurance to discuss. As is true of other insurance policies, when you buy life insurance, you confront arcane language, complex charts and tables, and pushy salespeople. However, pure life insurance offers one difference: The insured is not the primary beneficiary from the policy. Life insurance is really designed to protect the survivors of the insured. This is not to say that a life insurance policy yields no advantages while the insured lives. Nevertheless, the main reason to purchase a policy is for the death benefit, which you hope that your dependents collect a long time in the future. If your family or other people depend on your income, you need life insurance to help them live without your support if you pass away.

The insurance contract requires that the insurance company pay your beneficiaries a set amount, called the death benefit, if you should die for almost any reason. (For example, suicide is usually excluded for the first two to three years of a policy.) Your beneficiaries can receive the money in one lump sum, free of federal income taxes. The funds should be enough to replace the insured’s paycheck, cover daily living expenses, and pay the insured’s final medical bills and burial costs. In addition, the insurance proceeds should provide income for long-term needs such as retirement, estate taxes, or college costs.