Exemptions to the Individual Mandate
There are some cases where there is no penalty to not having coverage.
Basically, life insurance is financial protection.
When you buy life insurance, you draw up a contract with an insurance company.
You agree to give premiums (or payments) to the insurance company in exchange for a lump sum payment when you die.
Upon the your death, your dependents or beneficiaries receive this "death benefit".
Life Insurance can serve a variety of purposes:
Life insurance can help your family make up for loss of steady income upon your death.
It can help reduce any burdens of debt that your dependents inherit when you die.
It could mean your dependents won’t have to sell their own assets or go into debt to pay your outstanding bills or taxes.
It can be used to help with other financial goals: such as retirement or education.
Your need for life insurance will vary with your age and your responsibilities.
The need is usually greatest for families with children and only one breadwinner or when there aren't enough savings to support the surviving family members for long.
Before buying life insurance, gather your personal financial information and review your needs. There are several factors to consider when deciding how much life insurance you need:
Will you have any immediate needs at the time of death?
Such as medical expenses, burial costs, and estate taxes.
Will your loved ones need funds for a readjustment period?
For example: to finance a move or to provide time for remaining family members to find a job.
Will there be ongoing financial needs?
Such as monthly bills and expenses, daycare costs, college tuition, retirement, etc.
There is no substitute for a careful evaluation of the amount of coverage that you need. However, a good rule of thumb is to buy life insurance five to seven times your annual take-home pay.
This varies based on individual circumstances, such as income level and how much insurance one can afford.
It is important to remember that the main purpose of life insurance is financial protection for your loved ones.
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