Even though most people do not like to think about it, the reality is that life insurance coverage can protect your loved ones if the unthinkable should occur. But, even for those who already own a life insurance policy, not having enough life insurance coverage could still leave your loved ones short of the funds that they will need to get by going forward.
Because our lives are constantly changing, it is important that you appropriately evaluate the amount of life insurance coverage that you have on a regular basis – especially if you have encountered any life changing events such as marriage, divorce, or the birth of a child. In addition, having just one type of life insurance coverage may not be the best option for you either.
This article is going to look at the different things that you’ll need to compare when you’re shopping for life insurance coverage. It can be an overwhelming search, but this article should cover any questions or concerns that you may have about your life insurance search. Life insurance is one of the most important investments that you’ll ever make for your loved ones. It’s vital that you purchase the best plan for your family.
Why Should You Have Life Insurance Coverage?
It has been estimated that nearly 70 million adults in the United States do not have any type of life insurance coverage at all. This includes nearly 6 million households, or approximately ten percent of families who have children under the age of 18.
Leaving your family members and those who are important to you without the cushion of life insurance could result in a devastating life changes for them should the family’s breadwinner no longer be there to provide the financial support that they need.
Today, especially in light of the current economic situation, the resources that are maintained by most families are being stretched even thinner, leaving people even more vulnerable should an accident or an unexpected death occur. Because of this, it is even more essential than ever before that families are protected with the benefits that life insurance coverage can offer them.
The proceeds from a life insurance policy can help your loved ones in a variety of ways in continuing their lives without the need to make drastic changes. For example, the proceeds from a life insurance policy can help to not just pay off immediate funeral or other final expense costs, but it can also help in eliminating other debts such as a mortgage, car loan, credit card debt, or a child’s future education costs.
If something tragic were to happen to you, and you didn’t have life insurance coverage, then your family would be left with a massive amount of debt and other final expenses. Not having life insurance coverage is one of the worst mistakes that you could ever make for your loved ones. If something tragic were to happen to you, your family is going to be left with all of your bills and other financial expenses. If they didn’t have life insurance resources, they would be struggle financially as well as emotionally.
The Types of Life Insurance That Are Available
Today, there are a wide variety of life insurance policies that are available in the market place. The type of life insurance policy that you need will depend upon your specific situation. Various factors that help in determining the best policy type for you include the amount of coverage that you need as well as the length of time that you will need it. And, it may be that you could benefit from more than just one form of coverage. We can also help you find FEGLI life insurance if this is something that interests you.
Term life insurance, as its name implies, is purchased for a specific period of time. These types of insurance policies usually start out fairly inexpensive in comparison to a similar amount of coverage on a permanent type of life insurance policy – especially for those who are young and healthy.
But, once the term policy’s time period has elapsed, the term life insurance policy must be renewed at the insured’s then current age. It is also based on the current health condition of the insured. At that time, even if the individual re-qualifies for coverage, the premium for the same amount of coverage will typically be quite a bit higher than during the previous “term” of coverage.
A term life insurance policy is a good option for those who are wanting to cover “temporary” needs. For example, those who may want to ensure that their mortgage will be paid off if they pass away could purchase a 30-year term policy. That way, the policy will be in force throughout the entire life of their mortgage. When the policy expires, the mortgage balance should also be paid off.
Alternatively, permanent life insurance policies may start out with a higher premium than a comparable amount of term life insurance coverage. However, permanent life insurance is designed to cover insureds for their entire life. Therefore, provided that the premiums are paid, a permanent life insurance policy will not ever need to be renewed, and therefore the premium will remain the same throughout.
Permanent life insurance also provides a cash value component. Here, cash can accumulate on a tax deferred basis over time. This means that there are no taxes that are due on the gain in the cash – unless or until it is withdrawn. This can allow the cash to accumulate exponentially. The cash in a permanent life insurance policy can be withdrawn or borrowed by the policy holder for whatever needs that he or she sees fit – providing them with another nice benefit to their life insurance policy.
A permanent life insurance policy may be a good option for someone who plans to keep their life insurance coverage throughout their entire lifetime. It can also be a good choice for a person who would like to build up additional savings in addition to having life insurance coverage. You can also see some other less used policy types HERE.
How to Determine the Amount of Coverage That You Need
Determining the amount of life insurance coverage you actually need will depend upon a number of different factors, including whether you are married or single, if you have children, how much debt you have – or expect to have in the future, your current age, and whether or not you own a business.
Some of the primary criteria that you need to consider include the following:
- The amount of debt that you would like to have paid off such as a mortgage or credit card balances
- Ongoing expenses of your loved ones such as utilities, food, clothing, health care, and other miscellaneous costs
- The type of lifestyle you would like for your family to maintain
- Any amount of other income that your family would still have coming in such as your spouse’s paycheck or rental income
- Future college education expenses of your children or other loved ones
- The cost of care for special needs children such as that for a disabled child
Coverage For Now and For the Future
In evaluating your need for life insurance, you should realistically decipher what your coverage needs would be if something were to happen now. And, you need to match those needs to an appropriate amount and type of coverage.
Yet, even when comparing all factors, your need for life insurance coverage will likely change as time goes by. Therefore, even if you have a policy that is based on past needs, as your situation changes, you will need to reevaluate your coverage and the amount of death benefit that you carry.
You will also need to determine what your goals for the coverage are. For example, are you using it for the purpose of income replacement for loved ones, the payment of final expenses, or for college funding for children who are currently young?
By knowing what your intentions are for the coverage, as well as the amount of proceeds that you will need – both now and in the future, you will be able to better determine the amount and the type of life insurance coverage that will best fit your specific needs and goals.
Because you never know what life’s going to throw at you tomorrow, you shouldn’t wait any longer to get the insurance protection that your family deserves. If you have any questions about life insurance, please contact one of our agents today. We would love to answer those questions and connect you with the best plan available. We know that shopping for life insurance coverage is not a fun experience, but that’s why we are here to help. It’s our mission to ensure that you’re getting the best plan.