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All You Ever Wanted to Know About Insurance

Temporary (Term) Life Insurance Basics

Temporary life insurance is also known as term life insurance; this is the type of life insurance that will replenish your economic human life value if you're an unintended end during a specific time. This sometimes is referred to as death insurance, and the only way to collect it is to die. Term life insurance is excellent and necessary for ensuring that your family will be provided financially if you were to pass away. Term life insurance companies that all the hopes and dreams you have with and for your family will be achieved even if you are no longer with them.


This type of life insurance can be purchased in many ways. It can be purchased with an annual premium that increases every year with age or with a premium that stays level for a certain period and then increases with age after that period expires. At a certain point, the annual increases in costs are prohibitive, but that generally happens after the children are done with college and on their own. Therefore, when the cost gets too expensive, you can drop the life insurance policy and consider yourself self-insured.


What is the cost of term life insurance?


The first step in calculating the cost of term life insurance is how much death benefit you want. It is often thought the least expensive way to buy life insurance; it can be the costliest if you never file a claim. Thinking back to 20 times and come figure to calculate economic, human life value consider a wage is earning $100,000 a year. This is a good amount to consider because it is easily scalable. If you earn $200,000 a year, just double the calculation and so on.


If your spouse needs to replace $100,000 per year and they could earn a rate of return of 5% consistently and safely every year, a nest egg of $2 million is necessary. Some would consider this nest egg the deceased economic, human life value, but it falls short when your account for what the future may hold. All this amount means is your family could continue to live at the same standard of living as they did without the need to generate the last wage through trading the family's time for money. Now, remember that this number is 20 times income, and for many insurance companies, that stretches the upper limits of what they provide.


This amount of death benefit ignores the likelihood of earning a 5% rate of return every year in the family need for periodic lump sums for things like cars, vacations, college educations, and weddings. Do you add these variables to the mix? The deceased economic, human life value is better to find as much as the insurance company is willing to provide.