Welcome to 2014! As you begin the New Year, now is a good time to get your financial house in order. A good place to start is making sure you have adequate life insurance. Sure, everybody would like to live forever. But each of us will someday leave this earth due to old age, sickness or accidental death. Without life insurance, your death could spell financial disaster for your family or damage their financial future. Obtaining life insurance will insure that money is available to pay for final expenses (funeral, medical, estate tax) and provide for your loved ones.
For example, if you are a married man or women age 40 with two kids, some of the expenses you should consider covering with life insurance are: the value of your mortgage, consumer debt, college expenses for your kids, replacement of your salary or wages. The coverage you need can quickly add up to over $100,000. Once you establish how much you need, the next step is to determine what type of policy fits your needs and budget. You may tabulate that you need $500,000 of life insurance coverage but will the monthly premium fit easily into your budget. Your insurance agent can help you calculate the amount you need and select a policy that fits your budget.
As a guide, let us help you understand the two basic types of life insurance, term and permanent. Term insurance provides coverage for a certain period of time. For example, 5, 10, 15, 20 years or more. The death benefit will be paid to your loved ones if you die within the time period covered in your life insurance contract. Premiums are typically lower for term insurance in comparison to permanent insurance. The lower premium allows for you to buy higher levels of coverage.
Permanent insurance provides coverage for your entire life instead of just a certain period of time. It also provides for the accumulation of cash value that can be used during your lifetime to meet emergency or other financial needs. However, keep in mind that the primary reason for purchasing life insurance should be the death benefit.
Depending on the coverage level, both life insurance policies will require a medical exam to evaluate your health. The healthier you are the better the premium. You will also want to make sure your kids have life insurance as well. You can purchase a separate policy or add a child’s rider on to your policy. Please consult your insurance agent to completely understand your options.