Life Insurance doesn't have to be complicated. We make it easy.
No one really wants to think about life insurance or their own passing. But, if someone depends on you financially, it's a topic worth discussing.
Life insurance is a way for people to make sure that their loved ones will be financially taken care of in the event of their death. It provides a death benefit to the beneficiaries designated by the policyholder, which can be used to cover expenses like funeral costs, outstanding debts, and living expenses. In simple terms, life insurance provides financial protection for your family in case you pass away unexpectedly.
Below you will find answers to questions you may already have, but having a conversation is the best way to make the most of your decision on whether or not life insurance may be a solution for you.
Types of Life Insurance
Provides coverage for a limited period of time, typically anywhere from 10-30 years. While the most cost effective form of insurance, this type of coverage expires after its period of time. This type of coverage is great for young families, those with limited financial obligations, or others who only need coverage for a specific period of time.
Provides coverage for your entire lifetime. There are many forms of permanent life insurance, such as whole life and universal life, depending on your specific needs. However, all permanent life insurance includes some element of a cash accumulation portion that can allow for tax-deferred and potentially tax free growth. This type of coverage, while it can be perceived as more expensive than term insurance, can provide additional "living benefits".
Frequently Asked Questions
Life insurance can cover virtually any type of expenses, such as:
Funeral and burial costs
Uncovered medical expenses
Mortgage or rent
Credit card debt
Estate settlement costs
Healthcare and Insurance
Continuing a family business
The price of life insurance depends on four main factors: your age, your health, the type of policy and how much coverage you buy. In general, you’ll pay less the younger and healthier you are. You also typically pay less for a term life policy than a permanent life policy.
That said, don’t let your age or health status discourage you from considering life insurance. There are policies available for people of any age as well as those with high blood pressure, diabetes and a smoking habit. (Just know that you’ll generally pay more for your policy if you’re in poor health and/or smoke.)
Still wondering the answer to the question of how much does life insurance cost? If so, here’s a working idea:
A healthy 30-year-old can get a $250,000 20-year level term policy for just $13 a month.
That means that if you purchase that policy and pay the $13 a month without fail, your loved ones would get $250,000 if you were to die at any point during those 20 years.
A great starting point is to consider 7-10 times your income. However, there are many variables that can offset that need based on individual circumstances, including potentially coverage you may have from a workplace. While there are many online "Calculators" to help determine the amount of coverage you may need, there is no right or wrong answer to the question.
One could argue that some insurance is still better than no insurance. Think of life insurance as a tool to "buy time" for your loved ones. The more insurance you have, the longer they have to be able to adjust to the new realities and be able to continue their plans without financial hardship.
Everyone's plans for the future change over time, giving reason to periodically review your insurance coverage to ensure its still providing adequate coverage for your needs. Life changes happen, such as a marriage, welcoming a new child, or even entering retirement. All of these are good reasons to review your needs and current coverage.
Some life insurance policies, in particular permanent life insurance products, offer a tax-deferred and potentially tax free cash accumulation vehicle along with potentially other benefits. This cash accumulation can be used later in life to help pay for any expenses or help supplement retirement. Other benefits or riders can include coverage to help pay for long-term care expenses. While considered more expensive than term life insurance, there are also many additional benefits that can be harnessed through a permanent life insurance product.