When it comes to preparing your family for financial security, one of the core pieces is life insurance. The right type of insurance policy not only protects your family from a catastrophic loss but will also make sure that your family does not lose everything. When I was in high school, I had a buddy lose his father to an unexpected heart attack. This was a major life event for the family and for his father’s business as it was both an emotional and financial loss. The father planned ahead and purchased a life insurance policy prior to his death that allowed his family financial peace of mind. Life insurance provided a financial safety net for this family and has done the same thing for millions of families. How Does Life Insurance Work? When you purchase a policy, you are given a predetermined amount of benefits should something happen to the insured. It is a basic contract that is written on an individual to provide a lump sum payout that will help stabilize the family. Term Life insurance is one of the least expensive and commonly known types of life insurance. A policy can be purchase for a 10, 15, 20- or 30-year term that covers the individual and pays a specific amount if he/she dies during the term of the policy. The price is determined by the length of time the policy is for. The average 30-year-old can get a $1,000,000 policy for less than $1,000.00 a year. However, you must be able to show the need for the amount of life insurance. If you are earning $30k a year, you will only be allowed to purchase a $300k - $500k policy. The insurance company will not ensure your life for $10,000,000 if it would take you 333 years to earn $10 million dollars. The benefit must make sense. Why Do I Need Life Insurance? The biggest reason why you need life insurance is because unexpected things happen and there are still bills left around once you are gone – especially in a family environment. In the situation mentioned earlier, when the gentleman passed away he still had a mortgage, kids in private school, a wife that did not work outside of the home, and no way to pay his normal bills if he were not working. This family could have lost the ability to maintain their current lifestyle had he not taken out a life insurance policy. Where Do I Buy Life Insurance? There are a lot of reputable companies to purchase a term life insurance policy through. Be careful of the agents who require you to purchase a policy through a mutual company – mutual insurance companies have their own obstacles and even though they charge more in premiums, does not mean they’re better. With basic information, most life and health insurance agencies can provide you with quotes from 5 or 6 insurance companies. Make sure you get an “A-Rated” insurance company and that the price fits in your budget. I personally recommend finding an “A-Rated” insurance company and a policy that is 10x your income that will allow your family financial stability.