4 Essential Things to Know About Life Insurance

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Today we are going to talk about what we should know about the four things we should know about life insurance.

Life insurance is a very specific product and that is why I thought it would be interesting to attack the topic head-on. Perfect.

Health insurance is the medical expense insurance that we have already discussed on other occasions. This protects you when you get sick or when you have an accident. But what is life insurance and what is it for? That’s what we want to talk about today.

Life insurance is financial protection for your family for the day that you are no longer there. Mainly, it is financial protection for your family for the day you are gone. Life insurance will put food on the table for your family or help your children continue studying if you are giving them that financial support. This means that it will help your family for any project that you have started and that maybe it is left halfway, and that project depended on your income.

But it could also be that you are in the middle of paying the mortgage on a house, a car, or debts. These are also important projects.

It is important to understand that life insurance is financial help and help your family so that they do not run out of your income and that they do not have debt problems, so that you do not leave them with debt.

As I said in the previous video we made this week, there are two certain things in life: taxes and death. And the latter can have many repercussions for everyone around us, not only on a sentimental level, but as we talked about, also on an economic level. No one wants to leave difficult financial burdens on their loved ones, and that is why life insurance exists.

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Today I want to talk about the four things one has to think about before purchasing or exploring whether it is worth buying life insurance.

Greetings from New York – I’m Carlos García, the president of Finja Beats, the number one financial app in Spanish in the US that allows you to invest in the stock market from 20, 50 or 100 dollars per week and without deadlines. You decide how much you want to be investing. If you haven’t done so, download the app today and start generating this financial habit of investing in your future.

Alright, let’s get started. The four things that will help you understand how to use or how to explore purchasing life insurance. Before continuing, I want to remind you that I am not an insurance agent and this information I am giving you is informative and for educational purposes. It is important to be well informed and that is why we are doing this. But I am not an agent, you must consult with an agent when purchasing life insurance.

First, the first point I want to talk about is age.

It may be that we already have a family, it may be that a family is already on the way, a son, a daughter, or it may be that we already have a contract to pay for a house, we have a mortgage, a commitment to the bank. If something happens to us, then these debts will fall on the family if we are no longer here and we do not have our income.

Obviously, no one is thinking about dying at this age and that is why it is difficult to say that at 30 or 40 I have to be thinking about protecting myself in case I die. But the way of thinking is: What would happen to my wife and children if they were left without my income? Although the probability is small, we must also think that perhaps the cost of this protection is worth it so that the family can continue with their lives.

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This is the first point I want to talk about: age.

Second point: how the contract works, how this insurance works.

Let’s talk about this. Life insurance is a contract that you sign with an insurance company, where you agree to pay a monthly sum in exchange for your family receiving a much higher sum in the event of your death. The contract is simple: you pay a fixed monthly sum to be protected in case you are not there, and that your family keeps that money.

What do I mean by commitments? Think about the mortgage. If you need to pay $100,000 on your mortgage, you can say: “I want my family to be able to pay their mortgage if something happens to me, so I leave 150,000 insurance so they can continue paying.” And that’s how you should think.

Another important thing is that if you are single, you don’t have to worry about having such a large amount of life insurance. Whereas if you have a family of four, you have to take care of those lives and think about how to protect them.

Important point: before obtaining life insurance, two things are important.

  1. You must have an emergency fund. You can’t be thinking about life insurance if you don’t even have an emergency fund. What do I mean? You must have at least a thousand dollars saved in an account that can protect you and your family in an emergency.
  2. You have to be investing for your retirement. It is important to have protection for your emergencies, but it is also important to be investing week by week or month by month for your retirement. These are essential habits that we should all have.
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Speaking of insurance, if you live in California, Texas, Florida or Illinois, I have great news.

Returning to the topic of life insurance, people who are listening to us, remember: the four things you should think about when buying life insurance.

We are at the third point.

It is necessary to distinguish what types of life insurance exist.

There are many types, but I want to focus on two main ones. In the US there are two very common types: “term life” or term insurance, and “whole life” or permanent insurance.

The difference between the two is that:

  1. Permanent insurance (“whole life”): This lasts a lifetime, therefore, the probability of obtaining the benefit of dying is 100%, since we know that there are two certain things in life: taxes and death. This life insurance protects you for life, but it is more expensive than term insurance and you will have to continue paying this monthly payment until the end. If you decide on these monthly installments, you will have to continue paying for 50, 60 years until you finish your life.

At 65, your family is completely protected.

These are two important points.

  1. Term life insurance is cheaper, but temporary.
  2. Permanent life insurance is more expensive, but it protects you until the end of your life.

And finally, the fourth important point: the cost.

The monthly cost of these insurances is important to understand.

In summary:

  1. Age: Between 30 and 40 years old is ideal.
  2. Functioning: Understand how the contract works.
  3. Types: Know the types of insurance: term and permanent.
  4. Cost: Analyze the monthly cost you can pay.

I’m Carlos García from FinjaBeats. See you in the next financial capsule!

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