YAKIMA, Wash. -- The very concept of life insurance was something foreign to Audel Cardenas.

People rarely bought into the idea back in Mexico, where he grew up. When he moved to the United States, he sometimes received ads in the mail about it, but the envelopes wound up unopened in the trash.

But then he and his wife ran into an old friend who had started selling insurance. She came to their Toppenish home a few times to explain how it worked.

Cardenas and his wife talked about it for several months, remembering how hard it was to gather money for funeral expenses when her father died a year earlier.

About three months ago, they bought policies.

"Since then, I've felt so much more peace of mind," said Cardenas, 34, a state warehouse inspector. "It's not so much money to pay every month, and it's worth it to know that if one of us passes, we won't have those debts, and that the family can start over again."

He, his wife and two children are now among the 2 million life insurance policyholders in Washington.

Cardenas and his wife both have $500,000 policies, and the children both have $100,000 policies.

"It seems to me a bill that we can afford," he said. "I mean, if we already pay some $300 a month in credit card bills, then we can afford $150 a month for the whole family to have coverage. That realization is what decided it for us."

Life insurance policies are a contract between a policyholder and an insurance company. The policyholder agrees to pay a set amount of money throughout the policy's length, and the insurer pays back a lump sum if he or she dies within the contract.

People get the policies not just for funeral costs -- which can range from $5,000 to $10,000 -- but to help the deceased policyholder's family with the loss of his or her income.

If you're thinking about buying a policy, the Washington State Office of the Insurance Commissioner, which regulates the industry for the state, suggests you ask yourself two questions: (1) What costs and hardships will my family deal with after I'm gone? (2) How will the loss of my salary affect my family?

"It's unexpected. And few people have so much money in their savings accounts to pay for funeral costs," said Yerania Espindola, a Heritage University senior and agent with New York Life. "When somebody dies, the family is unprotected.

"It can be something huge, financially and emotionally."

In his line of work, Cardenas said he often sees collection cans with photos of the recently deceased. It's a way families raise money for funeral expenses.

"I don't want my family to have to battle like that if I die," he said. "Wouldn't it be better to actually leave a little something for the kids, for the funeral, for their future and college instead of leaving the family so sad and begging for money?"

There are three ways to buy policies: on the Internet, directly from the insurance company through the mail, and from an agent. Most people choose the latter.

But be sure to shop around, recommends the commissioner's office, which states on its Web site: "Companies use different methods and factors to decide who they'll insure. Or, if available, consider a group plan -- some don't require a medical exam."

And no matter how you go about it, make sure your agent or insurance company is licensed to do business in Washington.

* Melissa Sánchez can be reached at 509-577-7675 or msanchez@yakimaherald.com.

Who needs life insurance?

Not everyone needs life insurance; the general rule is that you only need it if you have dependents.

Life insurance is generally designed for younger, working people with families. It's meant to replace your "value" to your family once you're gone. For a working parent, a big part of that value is your salary. If you die, you'll want your family to receive enough money to replace your salary for at least five to seven years.

What kind of plan?

The most basic type of life insurance is term life insurance. Term policies cover the policyholder for a set number of years, anywhere from one to 30. For younger, healthy people, term life insurance is the least expensive option.

The other types of life insurance fall under the heading of permanent life insurance. As the name implies, the policy is good from the day you buy it until the day you die, no matter when you die.

The biggest difference between term and permanent life policies is that permanent policies include a cash value component. This means the insurance company invests your premium payments to build up cash reserves in your account. The advantage of permanent life is that you aren't taxed on investment earnings until you cash in the policy.

What about health?

The cheapest rates, known as select or preferred, go to those who are in good health and who have a family history of good health.

If you take heart medication or are grossly overweight, you may pay 50 percent more than preferred rates.

So, there's a good case to be made for getting a policy early in life when you are still in good health.

Source: www.money.com