Which life insurance policy should you buy? You will at some time in your life come to the conclusion that you need to buy some life insurance. You have a pretty good idea how much you need but deciding which life insurance policy is best for your particular need is another question. There are many to choose from. May be if we examine the varying reasons why people buy life insurance and which policy best fits a particular need you would more easily come to a decision. Here goes.

 

Most people have a desire to own a house at some time. Some are small and cozy and seem to just ooze family. Others are larger and may seem to project affluence and success. One thing they all seem to have in common is that this piece of property is very important to it's owners. Sometimes it is simply pride of ownership that drives a person to buy a house. In other situations this home is bought because the couple may just want a home for the family. They want their children to know that this is their home.

You buy homeowners insurance to protect your home in case of fire or any type of disaster that may destroy it. You also need to buy some mortgage life insurance in the event of the death of the person who pays the mortgage. One of the best policies to use is the decreasing term life insurance policy. You buy this policy for the duration of the mortgagefor example 20 years. Upon your death the insurance company pays your beneficiary an amount equal to the balance owed

They therefore have a house free and clear. Some people prefer to use, for our example, a 20 year level term life insurance policy. If you died in the first year the same amount would be paid to your beneficiary but if you should die for example in year ten there would be sufficient money to pay off the mortgage but there would be considerably more cash that your loved ones would certainly welcome.

Family Protection

One of the main reasons for buying a life insurance policy is for the protection of your family in case you should prematurely die. They will need money to pay last expenses like burial costs, probate costs, attorneys fees and of course the big oneestate taxes. Although the congress has repealed the estate tax it has been done on somewhat of a sliding scale until the year 2010so the fact is that if you are in that tax bracket you have estate taxes to pay upon death.

You also must consider that your family still needs your income after your death. You need a policy the proceeds of which can be paid out in the form of an income. The best way to do these things is to buy a life insurance policy to take care of the cash needs and another life insurance policy that would provide income at your death. In either case the most commonly used policies are the 20 year term life, the 25 year term life or the 30 year term life insurance policies.

Some people like universal life insurance, variable life insurance, variable universal life insurance or whole life insurance. These life insurance policies include cash values which you could use during your lifetime.

Business Life Insurance Needs

Small business owners needs for life insurance policies differ from individual need or family protection needs even though the focus still is in the surviving family. A corporation or a business partnership would buy a life insurance policy on each of the partners or stock holders that would provide sufficient cash to buy a deceased partners or stock holders shares from his or her heirs. A buy sell agreement is drawn up by an attorney. It is funded by life insurance and is binding. Most business people use 20 year term life insurance policy or the 30 year term life insurance policy for this. Any of the permanent cash value policies can also be used.

Business owners may also buy life insurance to protect the business against the loss of a valuable key employee. The business would own the policy and also be the beneficiary. Upon the death of the key employee the cash from the life insurance policy would be used to help the business stay afloat while they search for a capable replacement.