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How to Use Life Insurance for Your Family?

by Uneeb Khan

Procrastination, which is something we all share, is often as simple as putting off something until later. It can be devastating for your loved ones if you delay getting life insurance. We know that there are many people aged between 30 and 50 who don’t have a will. However, we also know from information collected over the past year that many others do not have life insurance.

Why aren’t more young adults getting life insurance?

 Due to the economic turmoil and the many challenges they are currently facing, Life insurance often gets pushed to the bottom of the priority list. For those aged between 30 and 50, it can seem overwhelming, boring, or unimportant to shop for life insurance. However, life insurance is essential for those who have children, marry, purchase a house, and/or lead a lifestyle that is dependent on the income of their spouses.

Choosing a policy that is right for you.

 There are two types of life insurance, permanent and term. The cash value or “permanent”, life insurance policies provide death benefits. Some of the characteristics of investment include the fact that a portion of the money spent to fund the policy is invested into a savings program. There was a boom in Variable Life products, which allowed customers to use options similar to mutual funds to invest their savings into the stock market. Almost all these products promised stock market-like returns, but they have almost always failed. The insurance company invests the cash value/savings section of permanent policies and pays a fixed interest rate. Market conditions may change.


These types of permanent policies have higher premiums than those for term policies. Term policies offer insurance coverage for between 10 and 25 years. This is a great option for young adults and others who need specific coverage. It’s also relatively affordable. The downside to term Life Insurance Pakistan is that if you die before the end of the policy’s term, your family members will not be entitled to the death benefit. New York actually passed a law years ago to prohibit people over 70 from purchasing term policies. This was because the buyers often outlive the coverage period and had paid significant premiums. Although many term life policies are non-renewable, some may be converted to permanent coverage (3).

These are the key questions:

 What length of coverage do you require? How much coverage do you need for your beneficiaries (both children and spouse)? What can you do to support your cash flow?

Insurance professionals often present life insurance as an investment. It is not. First, life insurance can pay for funeral and burial expenses. Second, it can replace income lost from a spouse who is not working. Third, as part of an estate plan tool, it can leave a legacy for loved ones or charities.

 Answering the key questions will help you determine if you need permanent or term life insurance coverage.

Terms can be very cheap, but it is important to remember your needs.

 Premiums for 10-year guaranteed term policies at a very affordable price are shocking. For an example, a 40 year old woman in good health could get $250,000 coverage through one major insurance company for $16 per month in August 2011.

If you have insurance needs that go beyond the term, it is worth considering if you can save money in the short-term.

Review, Reflect and Decide.

 You can search the internet to compare insurance policies. However, with so many companies offering different types of coverages, professional assistance is also an option. Talk to both of them, and make sure you do your research before you purchase the next policy. That professional can perform a term-versus-permanent analysis for you and help you weigh per-policy variables or perhaps show you a cost effective way to combine the two types of coverage.

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