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Life Insurance

Life insurance can provide for a child in case both parents die, and can provide for a spouse or other caregiver so that he or she won't have the sudden and overwhelming financial burden of going on alone.

The size of the life insurance policy that's right for you depends on a lot of factors. Try to figure out how much your family would need to continue their lifestyle if you were to pass away. Many experts suggest six to ten times your yearly salary. Take into consideration the following:

• The usual expenses of your family
• Large amounts of money needed in your child's future - college costs, for example
• How much income you usually provide for your family.
• The extra expense of raising a family alone (childcare, domestic help, etc.)
• Your assets and investments that will be available to pay these expenses. That will reduce the amount of life insurance needed.

There are many different types of life insurance, but two of the most common are term insurance and whole life insurance. Term insurance is like auto insurance. You pay a premium, and if you die during that term, your beneficiaries will be paid. The rates increase as you get older because your chance of death is higher. Whole life insurance guarantees a level premium over your whole life. A whole life policy accumulates cash value, but to tap that value you must cancel the policy or borrow against it. When you die, the insurance company pays only the face value of the policy, not the face value plus the cash value. If you cancel the policy, you will be taxed on the amount you receive less the premiums you have paid.

Talk to an insurance agent for more specific information about life insurance plans and which one is right for you.