How would your family cope financially if you died? This can be difficult to think about, but life insurance can help ensure that your family will be able to recover from the loss of your income and pay any outstanding debts or bills you leave behind. If you’re confused about what kind of life insurance policy you need, here are some tips on why it’s beneficial to get life insurance right now and how to choose an insurance company that’s right for you and your family.
What life insurance is
Life insurance is a contract between an insurer and an insured person, called a policyholder. The insurer promises to pay a sum of money to one or more individuals upon the death of an insured person. There are many types of life insurance, but all policies have one common goal: providing for your loved ones when you die. For example, a whole-life policy will accumulate cash value over time, which makes it possible for your beneficiaries to receive larger payments in later years.
Who needs life insurance
Almost everyone. If someone depends on your income, most experts say it’s a smart idea to have some form of life insurance in place.
How much life insurance do I need?
The amount of life insurance coverage you need depends on several factors, including your net worth, current assets and debts, future earning potential, and family situation. For example, a young family with student loans to pay off will likely have different needs than a retired couple whose biggest financial responsibility is their mortgage.
Get your family prepared
When someone passes away, all their affairs need to be finalized. In most cases, these include health care costs, funeral expenses and estate taxes. If a family member or partner is left behind to take care of these things on their own, it can be an overwhelming experience. Life insurance helps lessen that burden by providing a steady stream of income in case something happens to a loved one.
Buy term or buy whole life?
What type of life insurance is right for you? Before deciding, it’s important to learn about each of these types. The right answer will depend on your personal financial situation and future goals. It’s also important to understand that neither term nor whole life is a silver bullet in an investment portfolio—they both have advantages and disadvantages that must be considered. Let’s take a look at some pros and cons…[see below]
Where to buy your policy
First, you need to decide how much coverage to buy. Most advisors recommend buying enough coverage so that your beneficiaries can pay off any remaining debts and cover funeral costs—plus a little bit more for loved ones’ peace of mind. However, if you’re young or don’t have many assets or kids, a basic term policy may be all you need. The best way to find out is by visiting an independent broker who will help you compare prices and coverage options from multiple companies.
A key factor that prevents people from getting a policy is procrastination. Life events can be very stressful and cause us to make irrational decisions—if you’re considering life insurance, make sure to take action quickly. It’s never too early or too late to take care of your family’s future. Make sure they are protected! If a loved one has passed away, make sure his/her dependents are cared for by purchasing a policy while they were still alive.