Do I Need Life Insurance?
If you are the primary earner in your home, life insurance should be a priority for you. You need to make sure that your spouse, children, and anyone else who depends on your income will not suffer financially if you pass away. As a secondary earner or stay-at-home parent, you too provide a valuable service to your family, and a smaller policy should be considered for you as well. However, first priority should be finding sizable coverage for the main breadwinner in your home.
How Much Life Insurance Do I Need?
You can use an online calculator or consult with a financial planner to get specific numbers, but we can give you a guideline for buying enough coverage to protect your family after a loss. However, you will want to take into account how much is owed on your home loan, other debts you may have, how much money you have in savings, IRAs, mutual funds, and other assets, and the yearly and monthly costs of living for your partner and children so that they do not both lose a loved one and lose the lifestyle to which they were accustomed all at the same time.
What Types of Coverage Are There?
You can purchase a whole, term, or universal life policy. Whole life insurance is coverage that stays with you for your entire life. The money you pay for coverage is, essentially, an investment that will earn interest, accumulate value, and eventually be able to be drawn upon for retirement and other expenses as you age – or transferred to your loved ones as an inheritance at the time of your passing. Term life is coverage that lasts from a set start date until a set end date, usually a period of ten or twenty years. Once the term expires, so does your coverage. The money you spent on the policy is never returned to you. A universal life policy is comprehensive and includes both term and whole options for maximum protection.
What Factors Affect My Premiums?
Your health and age have the most impact on how much you will pay for life insurance. The younger you are, and the better health you're in, the more likely you will be to obtain preferred rates. Smokers and those who are overweight can expect to pay more, since their conditions put their health (and life) at risk. Your hobbies can also impact your premiums, as people who regularly engage in dangerous pastimes are viewed as high risk by their insurers.
Who Can Buy a Policy on My Life?
In order to buy a life insurance policy on someone, you must have their permission, as well as a legitimate reason for doing so. For instance, in some cases, businesses are able to insure their important officers and operators because that loss could cause the entire company extreme financial hardship. Parents are able to purchase coverage for their minor children without permission, also, though this is not always recommended as a sound financial decision.
