Premiums are the money the policyholder pays for insurance. The insurance company will determine whether there is an insurable interest and if the proposed insured qualifies for the coverage based on the company’s underwriting requirements related to age, health, and any hazardous activities in which the proposed insured participates. The insured will choose the desired death benefit amount based on the beneficiaries’ estimated future needs. The death benefit or face value is the amount of money the insurance company guarantees to the beneficiaries identified in the policy when the insured dies. The insured might be a parent, and the beneficiaries might be their children, for example. Note, however, that some insurers may deny coverage for such individuals, or else charge very high rates. This strategy is called pension maximization. Instead of choosing between a pension payout that offers a spousal benefit and one that doesn’t, pensioners can choose to accept their full pension and use some of the money to buy life insurance to benefit their spouse. If the death of a key employee, such as a CEO, would create a severe financial hardship for a firm, that firm may have an insurable interest that will allow it to purchase a life insurance policy on that employee. A small life insurance policy can provide funds to honor a loved one’s passing. Families who can’ t afford burial and funeral expenses.Life insurance can provide funds to cover the taxes and keep the full value of the estate intact. Wealthy families who expect to owe estate taxes.Stay-at-home spouses should have life insurance as they have significant economic value based on the work they do in the home. According to, the economic value of a stay-at-home parent would have been equivalent to an annual salary of $162,581 in 2018. A 20-something adult might buy a policy even without having dependents if there is an expectation to have them in the future. The younger and healthier you are, the lower your insurance premiums. Children or young adults who want to lock in low rates.Young adults without dependents rarely need life insurance, but if a parent will be on the hook for a child’s debt after their death, the child may want to carry enough life insurance to pay off that debt. Young adults whose parents incurred private student loan debt or cosigned a loan for them.Life insurance can help reimburse the adult child’s costs when the parent passes away. This help may also include direct financial support. Many adult children sacrifice time at work to care for an elderly parent who needs help. Seniors who want to leave money to adult children who provide their care.One example would be an engaged couple who take out a joint mortgage to buy their first house. Married or not, if the death of one adult would mean that the other could no longer afford loan payments, upkeep, and taxes on the property, life insurance may be a good idea. The death benefit can be used to fund a special needs trust that a fiduciary will manage for the adult child’s benefit. For children who require lifelong care and will never be self-sufficient, life insurance can make sure their needs will be met after their parents pass away.
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