If you are thinking about purchasing life insurance, you are on the right track! Life insurance is one of the best financial decisions you can make. A life insurance policy helps protect the loved ones you leave behind, but it is also a useful tool before then!
According to The Grange Guide to Insurance there are 5 important things to take into consideration when buying life insurance
1. Determine the Length of Coverage Needed
There are several types of life insurance policies – some are designed to last a certain period of time (these are called Term Life policies), and other are lifetime policies.
- TERM LIFE: If you are looking for insurance for a specific period of time (such as while your kids are growing up, or the length of your mortgage) the term life policy is your best bet.
- LIFETIME POLICIES: If you are in need of life insurance for as long as you are alive (for things such as burial expenses or a surviving spouse) permanent life coverage is the policy you would want to select. There are several types of policies, including Whole Life & Universal Life.
2. Calculate How Much Insurance You Need
An easy way to determine how much coverage is right for you is to consider the following:
- Debt (things such as your mortgage, student loans, car loans, credit cards, etc.)
- Income Replacement (consider anyone who depends on your income)
- Mortality (burial wishes/costs)
- Education (cost to fund child care/college education for children/dependents)
3. Think of Other Objectives
Some permanent live insurance policies can be used as savings since they have cash value that is meant to increase over time.
4. Who Will Your Beneficiary Be?
The beneficiary to your life insurance policy is the person who will receive the funds of the policy. When choosing a beneficiary, it is best to avoid naming a minor child (children may not be able to receive funds) or your estate (it could have tax implications).
5. Talk with a Trusted Advisor
Purchasing life insurance is a big decision, and you want to make sure you are getting sounds advice from a trusted source. At Lauber & Will we have several agents who are more than happy to review your situation and provide advice.