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Life insurance financially protects your family and others who depend on your income. If you have life insurance, it will make payments after you die to the person you designate in your policy. This person is called your beneficiary. You can name more than one beneficiary. Your beneficiaries can use the money to pay bills and other expenses of daily living, pay debts, pay for college and other things. Some types of life insurance also generate savings that you can use during your life.
Do I need life insurance?
Not all people need life insurance. In general, life insurance is a good idea if you have family members or other people who depend on you financially. There is no formula to decide how much life insurance you need. To decide the amount that is right for you, consider your debts, the amount of income your family must replace and whether they will have bills to pay or other expenses.
How can I get life insurance?
You can buy life insurance directly from insurance companies and agents. Insurance companies use a process called underwriting (underwriting) to decide if they will sell you a policy. This often includes having to pass a medical exam and answer questions about your health, work and habits. A company may refuse to sell you a policy if it considers you to be a high risk due to your health or other reasons.
Some employers and groups, such as churches, unions and other associations, offer group life insurance to their employees and members. The subscription criteria for group life insurance are not so strict. Usually, you don’t have to answer questions about your health. As a result, you may be able to obtain group life insurance even if you cannot buy directly from an insurance company.
How much does life insurance cost?
The cost depends on your circumstances. Life insurance premiums are based on your age when you buy the policy. They are usually lower for people who are younger. Insurance premiums can be high if you are older or if you have risk factors. A company can charge you more if you smoke or if you have dangerous hobbies such as skydiving or mountaineering. Your insurance premium will also depend on other things, including the amount of coverage and the characteristics of the policy you choose.
For group policies, the risk is based on the entire group, not just one person. The cost is usually cheaper than that of a policy that you could buy directly from an insurance company.
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