Life insurance is an important tool that should be a part of everyone's plan to protect against financial loss at death. In exchange for payment of premiums, an insurance company agrees to pay your beneficiary an amount of money based on the death benefit of your policy. There are many good reasons to purchase life insurance and the type of coverage you need depends on the amount needed to cover both anticipated and unanticipated expenses for your family and loved ones. Life insurance can be used to pay funeral expenses, replace lost income, pay off debts or loans, and create a fund for your children's or grandchildren's education, or care for dependents or loved ones with special needs.

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Life insurance typically falls into three categories: term life, whole life and universal life.

Term life is the least expensive type of policy and builds no cash value. It pays only if death occurs during the term of the policy, which is usually one to thirty years. A term life policy is designed with only one function: upon your death, it pays a lump sum to your designated beneficiary.

Whole life insurance, also known as permanent life insurance, provides coverage throughout the insured's lifetime, has a death benefit and builds cash value on a tax-deferred basis, and the insurer cannot cancel the policy as long as you pay your premiums on time. Whole life insurance premiums are larger than term life premiums, because they fund the cash value in addition to buying insurance coverage.

Universal life insurance is also permanent life insurance and is similar to whole life insurance. These policies also provide coverage throughout the insured's lifetime, have a death benefit and build cash value on a tax-deferred basis. However, unlike whole or term life, universal life is a more flexible product. Because the death benefit, premiums and cash value are treated as separate components, as the policyholder's circumstances change, the components can be reviewed and altered.

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How much insurance you need depends on your particular circumstances. How much would it take to replace your annual salary for your surviving spouse and family and allow them to maintain their standard of living? Would you like to create an inheritance for dependents or make a charitable contribution? Do you have enough savings to pay your final expenses? One method is to multiply your annual gross income by a multiple of years in order to determine how much basic income is needed to cover living expenses for your beneficiary in the event of your death. The amount of life insurance you need requires careful planning and consideration. It is a good idea to work with an insurance professional to determine your needs.

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Almost everyone can benefit from the right life insurance product. A single person should consider the following options: younger singles can benefit by purchasing life insurance before age and certain health considerations become a factor in qualification. If you have dependents and would like to leave an inheritance or provide money for a college fund; or perhaps you would like to leave a charitable donation to your favorite organization, you might want to consider purchasing life insurance. Even if there is no one depending on you for financial support, in the event of your death, a life insurance policy can help ensure that you have enough money to pay outstanding debts or pay for funeral and other final expenses so that your family would not be financially burdened.

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Riders provide additional benefits that can be added to a basic policy often for an additional cost.

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The types of riders vary, but some of the most common are:

Accelerated death benefit riders allow for early payment of a portion of the death benefit should the insured become terminally ill, as defined by any specific policy.

Accidental death benefit riders provide an additional death benefit in the event that the insured dies in an accident.

Children's riders provide some measure of coverage on the insured's children usually up to a specified age - generally age 21, at which point the coverage can generally be converted to an individual policy for the child.

Spousal riders provide coverage for the insured's spouse.

Waiver of premium and disability riders are designed to keep the policy in force should the policy owner become disabled and unable to work, as defined by any specific policy.

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An annuity is a long term financial contract sold by an insurance company which promises to provide a specified series of payments to an individual for a fixed period, often for the lifetime of the recipient, in return for a stipulated lump sum premium or a series of premiums. An annuity is tax-deferred and can be used for accumulating money for retirement or other long term future needs.

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Annuitization is the payout period, where the designated person, or annuitant, receives the money from the annuity. If you choose to annuitize before the specified contract period is completed, the money you withdraw may be subject to early withdrawal penalties and other charges.

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Tax deferral means that taxes on the earnings of a financial product are postponed until you withdraw the earnings.

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When considering whether to choose a fixed versus a variable annuity, there are two important questions to ask: what are my long-term financial goals and can I afford risk?

A variable annuity has the potential for faster growth, however, that growth is not guaranteed since the product is tied to the market and there is a risk of loss. Therefore, a younger individual with disposable income and many years left in the work force might want to consider a variable annuity if that individual is financially able to withstand downward market fluctuations and wait for the potential upswing.

However, a person who cannot afford financial risk, or does not have many years left in the work force, or none at all, might value safety of principal and tolerate the slower earnings increase versus a potential higher increase with a risk factor. Even in a downward market spiral, a fixed annuity comes with the guarantee of a certain percentage of interest earnings depending on the annuity you choose.

Those desiring safety of principal who also want to explore the upward potential of the market may want to consider a fixed index annuity. These annuities offer the safety of principal guarantee but with the growth potential of annuities that are tied to a market index.

Choosing an annuity is an important decision and it is a good suggestion to work with a financial or insurance professional to help determine which product is best for you.

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A person who is looking for a competitive first year interest rate and the flexibility to invest more money over time may want to consider a flexible premium deferred annuity.

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Key features of a multiple year guarantee annuity are the security of guarantees and the flexibility to select from a range of interest rate guarantee periods so that a plan can be structured to fit individual preferences.

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An individual looking to save "serious money" for retirement or other future financial needs should consider a single premium deferred annuity. This type of annuity is a long-term, tax-deferred plan. You contribute a lump sum initial premium, usually no less than $5,000, and your interest earnings accumulate tax-free until you withdraw the money.

Standard Life and its representatives do not give legal, tax or accounting advice. If you need such advice, consult your attorney, accountant or personal tax advisor.

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Medicare is a federal health insurance program for people age 65 or older, under age 65 with certain disabilities, and any age with permanent kidney failure (called End-Stage Renal Disease or ESRD).

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In order to qualify for Medicare you must be a United States citizen or permanent resident age 65 or older and receive or are eligible to receive Social Security benefits. Or, you receive or are eligible to receive railroad retirement benefits; or you or your spouse (living or deceased, including divorced spouses) worked long enough in government employment where Medicare taxes were paid; or you are the dependent parent of someone who worked long enough in government employment where Medicare taxes were paid. Also, certain people younger than age 65 can qualify for Medicare, including those who have disabilities and those who have permanent kidney failure or amyotrophic lateral sclerosis (Lou Gehrig's disease).

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Medicare Part A can be categorized as hospitalization insurance. It covers inpatient care in hospitals, skilled nursing facilities and qualified home health and hospice care.

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Medicare Part B can be categorized as medical insurance. It covers doctor's services and outpatient care, and certain other Medicare services that Part A does not cover (like physical and occupational therapists) and some home health care.

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Medicare Part C, formerly known as "Medicare+Choice," is now known as "Medicare Advantage". Private insurers manage Medicare Advantage plans, like HMOs and PPOs. In order to join a Medicare Advantage Plan, you must qualify for Medicare Part A and Part B before you can apply for Part C.

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Medicare Part D is prescription drug coverage, also offered through private insurers, and covers only Medicare approved prescription drugs.

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You may apply for Medicare Part B when you turn age 65. If you still have group coverage through an employer, you do not have to sign up for Part B until that coverage ends. Individuals have the 3 months prior to turning 65 and 3 months following to apply.

After the year you turn 65, a 10% increase in premium penalty applies for each year of delay applying for Part B benefits.

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Medicare Supplement insurance is a supplemental insurance product designed to help pay for medical expenses not covered by Medicare. Medicare Supplement insurance plans are standardized by most states so that all insurance companies will have the same basic benefits for each category of plans.

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Like Medicare insurance, you must be age 65 or older to purchase a Medicare Supplement plan, and persons with disabilities who qualify for Medicare may also purchase Medicare Supplement insurance.

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Yes, there are twelve standardized plans (A through L) and each plan comes with different rates and benefits.

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While the answer to this question may reflect your particular preferences, there are certain key features to a Medicare Supplement that should be considered. For example, because Medicare Supplement plans are open plans, you can visit the physician of your choice and are not limited to a particular network. Also, with a Medicare Supplement, you have the freedom to travel the country and receive the same benefits from state to state. For more information and Medicare Supplement plans, see your insurance professional.

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Once you have received both Medicare Part A and Part B you have a 6 month qualification period following your enrollment in Medicare Part B.

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"Guaranteed Issue" is when you are not required to provide evidence of insurability to obtain coverage. If your health coverage terminates under certain circumstances you may be able to enroll in a Medicare Supplement policy regardless of your health status.

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Someone whose group coverage is ending would qualify as guaranteed issue for Medicare Supplement.

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You must enroll within 63 days after your health insurance ends.

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Supplemental health insurance policies are purchased in addition to your primary health insurance. They are designed to help alleviate the burden of unforeseen out-of-pocket medical and non-medical expenses not covered by your primary insurance. They pay a cash benefit to the insured or to the person designated by the insured.

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Yes. Some supplemental health insurance policies provide coverage for specific events or diseases such as cancer, accidental death, dismemberment, or confinement to a hospital.

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The very nature of an "accident" is the reason for purchasing accidental death and dismemberment insurance. No one expects to lose eyesight or a limb or lose their life through accidental means. Many accident related expenses such as advanced rehabilitative and physical therapies, and non-medical costs such as normal living expenses, or deductibles and copays may not be covered under your primary medical insurance. In the event of accidental death or a dismemberment situation, would you or your family be forced to dip into savings or liquidate assets? If so, you might want to consider purchasing this type of plan to prepare for the unexpected.

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Accidental Death and Dismemberment plans are guaranteed issue so no one can be turned down.

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Unfortunately, many primary health insurance policies do not cover cancer related treatment and expenses. While some plans may help to cover the major aspects of cancer treatment, there are generally many incidental day-today expenses that are not included in the plan.

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Supplemental Cancer plans can be used to help cover coinsurance and deductibles of major health coverage, off-set some of the expense of drugs and medicine, provide benefits to help off-set the cost of certain experimental treatment programs and provide benefits for radiation and chemotheraphy, hospital confinement, surgery and anesthesia, ambulance service and hospice stays for cancer treatment.

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Transportation and lodging is an often overlooked expense that can quickly add up for cancer patients and their families. Some supplemental cancer plans offer benefits for ground and air transportation, and lodging necessary for treatment outside your home city.

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If you have ever seen an itemized hospital bill you know how expensive hospital stays can be. From the fees of the doctors and specialists to the charges for individual aspirin, the cost of any item not covered by your insurance becomes a rapidly mounting financial responsibility. In some cases, hospital bills can take years to pay off. Hospital Indemnity coverage pays a daily benefit for each day you are confined that can be used to cover these costs.

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Hospital indemnity insurance is designed to assist with certain medical expenses and supplement many of the out-of-pocket expenses not covered by your primary health insurance such as coinsurance, deductibles, private room charges, in-room TV, expenses for travel and lodging, childcare, cell phones and other incidental expenses.

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