“Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individual's or individuals' death or other event, such as terminal illness or critical illness. In return, the policy owner agrees to pay a stipulated amount called a premium at regular intervals or in lump sums.” Wikipedia

What does that mean to the average person?

Most New Yorker’s don’t realize the importance of life insurance in today’s world. Its purpose is to protect your family from financial hardship after your death. According to the New York State Funeral Directors Association the average cost of a funeral in New York is $7,150. For most families that is overwhelming. Another thing to consider is the loss of your income. On your death you will no longer be able to provide for your family. Your insurance company’s duty is to pay your beneficiary a specific amount of money on your death, as long as you pay your monthly or annual premiums. Other things the death benefit could cover are your mortgage, debts, retirement fund, estate taxes, and a college education for your children.

It is important to determine the right amount of life insurance coverage you will need. The first thing to do is decide how much you can afford to spend. Remember, the cheapest plan is not always the best one. Your coverage should be based on your needs and the needs of your family. Whether you are married, or have children, your income, and the size of your family should all be taken into consideration.

Life insurance premiums are primarily determined by two things. The first is “risk of death”. The insurance company will need to determine your state of your health, and most companies require you to have a physical examination done. The second is the interest earnings they will make on your premiums. When you pay the insurance company each year they will invest that money in stocks, bond, mortgages, etc. and the state of the economy will determine what them make from it and in turn the cost of your premiums.

When you purchase your policy make sure you go over with your broker all the supplement benefits that you qualify for and are including in your package; as well as the additional benefits you may or may not want to purchase.