Life Insurance Basics


How much and what kind? 

In 2010, life insurance research company LIMRA found that 30 percent of U.S. households had no life insurance coverage. Luckily for these 35 million households, it’s an easy enough problem to correct, because buying a life insurance policy is a pretty simple process.

However, while the actual policy purchase may be straightforward, choosing the type of policy you want to apply for and the amount of benefits is a bit more challenging. While it’s a good idea to work with an agent through your financial institution to make the decision, you can start the thought process here by asking yourself the following questions:

  • What do you need the life insurance policy death benefit for? If you have debt or another temporary need for life insurance death benefits that will help your family financially survive your loss, then a term life insurance policy might be the best choice for you. However, if you want permanent protection that will pay out a death benefit to your heirs no matter when you die, or if you want to use your life insurance policy to help create a legacy or minimize estate taxes, then a whole life insurance policy could be a better option for you.
  • What is the health history of your family? It’s impossible to know what your future health will be, but if you know that you’re genetically predisposed to conditions such as high blood pressure, diabetes, cancer and other conditions, then you may want to get a whole life policy while you’re young and fit. The older you are, the more expensive life insurance becomes; the less healthy you are, the more expensive it becomes—until you reach a point where you can no longer get approved for it at all.
  • What are you trying to protect with your death benefit? The amount of death benefit you need will depend partially on what you are trying to protect. If you’re trying to protect your family’s assets, then choose a death benefit that pays off their debt after you’re gone. If you’re trying to preserve their way of life, then providing a death benefit that allows them several years’ worth of your income will suffice.
  • What are you trying to provide with the death benefit? A life insurance death benefit isn’t just about protecting and preserving assets; it’s also about providing something for your family. If you want to provide a new way of life, a means to pay for college tuition, a way for your spouse to retire or any kind of legacy, you must consider this when determining how much life insurance to get.

If you are overwhelmed by the prospect of choosing an insurance policy and death benefit, don’t let that stand in the way of your family’s future financial security. Instead, give us a call or stop by. One of our experienced professionals can assist you with selecting the perfect policy and death benefit for your needs.

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