Lets be honest. The life insurance subject is not exciting or glamorous, but it is important. In fact, many experts consider life insurance to be the cornerstone of good financial planning.
But how do you know if you need life insurance? How much does it cost? What kind of life insurance is best for you?
Answering these basic questions about life insurance helps to simplify the shopping process and lets you ultimately choose the best policy to secure your familys future in the coming years.
Determine your needs
To clear potential misconceptions, life insurance is designed to protect your loved ones from financial loss at the time of death. Knowing this is important to determine if you need life insurance and how much to buy.
According to MetLife, you usually need life insurance about
You have a spouse
You have dependent children
Relatives or older parents depend on your income
Your pension funds are not enough to give your husbands future
You own a company
You have a big property
The recipients of your life insurance can use the income from your life insurance to
Pay for the latest costs and funeral expenses
Cover property tax if applicable
Paying of existing debts mortgage, car loans, credit card debt
Pay for daily expenses food, clothing, childcare
Put against your husbands pension fund
Donate to charity
If you do not have custodians, you may still want to buy a life insurance to avoid becoming a financial burden for your loved ones in your immortal event. Young singles also benefit from buying life insurance while they are young and healthy, so that they can secure a low premium in the coming years.
Choose a dollar amount
To determine how much life insurance your loved ones would need to maintain the quality of life can be difficult. Generally, experts recommend buying between 5 and 10 times your annual salary. But, as MetLife points out, your exact life insurance needs will depend on your personal and financial circumstances.
You can get a balancing estimate of your life insurance needs by first bringing the funds your family would need for the above mentioned items funeral expenses, daily living, etc.. You can find helpful worksheets online that help you organize and bring this list of expenses.
Once you have totaled your expenses, find out the funds you have in cash, savings, pension accounts, bonds, property, retirement and social insurance. Subtracting your financial resources from your expenses gives you a rough idea of how much life insurance you are buying.
When it comes to choosing how much life insurance to buy, its a good idea to get an idea of your needs before buying a policy but your licensed life insurance professional will undoubtedly help you choose a dollar amount that accurately reflects your recipients.
Choose a policy
In general, there are two types of life insurance term life insurance and permanent life insurance. The type of policy you choose depends largely on your life insurance needs and the resources you need to pay life insurance premiums.
Term Life Insurance
The terms life insurance, as the name suggests, will cover you for a certain period of time, which means that the insurer will only pay a death benefit if you die during your policy period.
According to the Insurance Information Institute I.I.I., most people buy a 20 year policy, even though smaller terms are available. Of course, you can renew your maturity policy after it expires, even though your premiums may increase when you age. However, due to the temporary nature of thermal life insurance, policies are generally much cheaper and therefore an attractive option for young people and families with limited income.
Permanent life insurance
On the other hand, permanent life insurance, as you may guess, can be permanent. A permanent life policy will pay a death benefit if you die tomorrow or 60 years.
Permanent life insurance is also an appealing option for many because of the increased benefit of the policy that grows on tax deductions, which may turn out to be quite high over time. As a policyholder, you can borrow this cash value while living, which has been very helpful to some. Of course, most loans have to be paid back or they will be deducted from the death benefit, and your recipients may need to cash back to repay the loan.
Nevertheless, permanent life insurance offers a wide range of savings and investment options. Because of this, policy is generally more expensive than term policies, which can be difficult for young adults to handle.
Your life insurance professional will help you decide what kind of policy is best for your life insurance needs and your budget. But predicts these political types