Life insurance is a means of having something that will be used to help your loved ones and beneficiaries at the time of your death. There are so many cost involved surrounding death that this helps to take care of the final cost incurred for funeral cost. It also may be used to help care for those left behind and with the dispensation of your estate.
Term Life Insurance and Permanent Life insurance – Two Types
Term life insurance is purchased for only a specific length of time. The lengths of time that you can purchase this specific type of insurance are generally five, ten, or twenty year spans. With term life insurance it can be renewed in most cases at the end of the term. This type of insurance pays only a one time lump sum death benefit. It doesn’t accrue any cash value. This is a great life insurance for young couples just starting out or those who have a limited income as it is the most affordable.
Permanent life insurance differs from term life insurance. First there is no fixed time limit where the insurance will end such as twenty years. As long as you keep paying your premium monthly permanent life insurance will stay in effect. One of the best features of this insurance is that it does gain “cash value” meaning that it is an investment for your dollars. This works by a portion of your premium being placed in a tax-deferred investment account. You gain access to this investment while you are still living. Different types of permanent life insurance are available to fit your specific needs such as Universal Life, Whole Life and Variable-Universal Life.
How Much Life Insurance Do I Need?
Understanding Life Insurance needs can be difficult, an insurance agent can help you determine your specific needs. Life insurance needs change as living circumstances change, this should always be taken into consideration when determining your needs. A young father with a family to care for will have needs different than a young man that has no one but himself to worry about. Use the benefits calculator to assist in determining the right amount that you may wish to have for Life Insurance.
Basic Guidelines & Considerations to Assist in Determining Life Insurance Needs
- Funeral cost whether you have a traditional or non-traditional burial cost do incur.
- Federal and state taxes that may be due immediately on your estate. Usually estimated at 10% of total value.
- Loss of income to your family. Take into consideration debt owed and monthly expenses then calculate this amount for a year. Multiply this amount by the number of years that you feel they will need to understand the amount of life insurance you will need.
- Consider total amount of debt that your family will have at your death to help determine if you also want a lump sum to pay this debt off.
Once you feel that you have done your homework to help in the determination of just how much Life Insurance you need let one of our excellent agents help you to be sure that you get the right amount. It is never too early or to late when thinking about planning for financial needs.