Understanding life insurance

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It’s common in today’s culture that both parents work. Both incomes are relied upon to make ends meet. A working spouse’s income is what is used to feed and clothe the family, keep the lights on and pay the bills. Should the working spouse experience an untimely death that spouse’s income stops yet the dependents need to be fed, clothed and have a roof over their head remains. How will the surviving dependents pay for it without the deceased income?
A stay at home mom has economic value to the household. She sees the kids off to school, cooks, and clean in addition too countless other task. Should she experience an untimely death, you’ll need to hire Super Nanny to do all the work that she does. The difference is you’ll have to pay Super Nanny.  
Your need to preserve your economic value diminishes if you’re single with no dependents. You’ll undoubtedly be missed should you die. However, the loved ones you leave behind will be able to continue to fend for his or herself. Your need to preserve your economic value also diminishes as you age. Over time your children will grow older, wiser, and more independent while you’ll continue to amass your personal savings. As they mature, you’ll eventually stop supporting your dependent children. In addition, your savings will grow to a point where you’re self-insured.
Until personal savings is large enough to provide for the long-term needs and carry out the goals and wishes you and your family shared. Life insurance can be used to partially replace or fully replace the lost of your income or economic value in the event of an untimely death. Most people mistakenly believe that the purpose of life insurance is for burial expenses. Paying for burial expenses is a small component of life insurance. The real need for life insurance is to replace the income or economic value of the deceased.
Types of life insurance
There are two types of life insurance: term insurance and cash value insurance.
With term insurance, you insure your life for a certain amount of money for a fixed period of time. Term insurance is by far the cheapest and purest insurance program available. Term insurance is the only type of life insurance that I recommend. Hands down, term insurance gives you the biggest bang for your buck. There are four types of term insurance—annual-renewable term, guaranteed-level term, decreasing term and convertible term insurance. Without going into details about the various term insurance, I’ll suffice it to say that guaranteed-level term is your first choice and usually the only choice you’ll need.

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