LIFE
INSURANCE 101
What is Life Insurance?
Life Insurance is a contract between you and an insurance company and is a
way to protect your family in case of your death by providing funds to replace your income, as well as to pay funeral expenses, outstanding debts and taxes. Some life insurance policies accumulate cash value on a tax-deferred basis. These cash values can then be used for emergencies or to supplement retirement income.
Your need for life insurance can change over a lifetime. At any age, you should consider your individual circumstances and the standard of living you wish to maintain for your dependents. In most cases, you need life insurance only if someone depends on you for support.
Because people are living longer than ever before, the cost of life insurance has come down in recent years. But insurance companies consider several risk factors in determining your premiums: age, tobacco use, pre-existing medical conditions (including obesity, hypertension, high cholesterol) and dangerous occupations. Older people in poor health will pay more than younger, healthier people for the same amount of coverage.
See also our Life Insurance Glossary.
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