Life insurance is a vital step for your family’s estate plan; It offers your family a safety net in the event of your death. Investing in life insurance is a form of expressing your appreciation and love towards your dependents, whether it be your spouse, children, parents, or business partners. By investing in life insurance, you are allowing your loved ones to have reliable means to financially support themselves, in the case that you pass away.
Purchasing life insurance may be a complex process, especially taking into consideration the different types of coverages available. Additionally, because life insurance agencies receive a big commission from their sales, it may be challenging to decide and understand how much coverage you actually need, let alone who will provide you with trustworthy information and advice.
Taking this into account, we will thoroughly break down the common types of life insurance coverage, while explaining their unique differences, and what you need to know to before purchasing a life insurance. It is highly recommended to meet your family lawyer, to guarantee you acquire the proper coverage, that will benefit your own unique family. Nonetheless, there are a few factors that you should consider before shopping for your life insurance.
Risking Your Life:
Depending on the coverage you purchase, a life insurance policy pays benefits to your beneficiary in the event of your death. Even though you do not need it early in your life, the earlier you purchase your life insurance, the cheaper your monthly or annual premium will be. However, when you purchase it early you will be paying the premium for a longer period. Similarly, the healthier you are when you purchase your policy, the less you will pay in premiums. For this reason, many carriers require a medical exam before you are issued a policy.
There are two main forms of life insurance, which you can think as permanent and non-permanent. When you purchase a permanent coverage, such as a whole life or universal, as long as you pay your premiums, the insurance can’t be canceled, and will pay out when you die (unless you live longer than the guaranteed period). On the other hand, with a non-permanent coverage, also known as term life insurance, you pay premiums over a set period of time (normally 10, 20 or 30 years), and if you have not died during that period, the insurance will end, your installments are gone, and no benefits are paid when you die.
Which Do You Need?
To decide which type of life insurance you should purchase it is crucial to consider several aspects. When purchasing life insurance for your loved ones, you will need to die with life insurance coverage in place if any of the following three scenarios apply:
- You have dependents, such as minor children, elderly parents, or non-working spouses, who rely on you for their financial needs, and you do not have enough saved to provide for their needs for the duration of their life, in the case that you die.
- You own a business that requires cash infusion if you die to continue, until it can be sold, or a family member can buy out a business partner.
- You will have an estate tax bill that you want to make sure is covered by the purchased life insurance, in order for your family to not be forced to sell assets to pay your estate taxes.
In any of these scenarios, it is important you are covered by your life insurance, whether it be a term life insurance that will cover you until the day of your death or consider purchasing permanent coverage.
How much Coverage is the Right Amount for you?
When looking into acquiring a life insurance, you want to make sure you have enough term life insurance to cover the expenses that your dependents will need until they are no longer dependents, or you are sure that you will have sufficient savings to cover the needs of the lifetime of those dependents. For instance, it will take a longer period of care after your death for a parent who have children with special needs, than parents of children who will achieve their own independence in their late 20’s or 30’s. To determine the best coverage for you, be sure to CONTACT US today to learn more.
Your Trusted Advisor:
Every individual consists of unique assets, liabilities, and family dynamics. That being said, there is no way to know exactly what coverage your family should intend to purchase without a full evaluation. Before you sit with an insurance agent, make sure to call Legacy Counsel to better understand the most appropriate life insurance policy for you and loved ones. Contact us today to schedule your appointment.
