Life insurance is simply a contract between the owner of the life insurance policy and the insurance company. The contract states that in the event of the death of the insured, a specified amount of money will be paid to the designated beneficiary. Insurance should typically be purchased when you have something to protect.
You may want life insurance if you have minor children and you want to ensure adequate resources for their care until they can care for themselves. If you own property (like a home), life insurance can ensure there are funds available for mortgage payments, taxes, and upkeep on the property if something should happen to you. Life insurance can also be a cost-effective way to handle taxes for estate planning. It can help cover the expenses of saying goodbye to a loved one and also be an important business planning and succession tool.
There are various types of insurance products and some provide more investment opportunities than others while some have an actual cash value.
It’s important to talk with your financial professional about what the insurance is covering, how it can be a part of your financial plan, and how much you may need to buy.