Things to Consider Before Buying Life Insurance
June 20, 2023
A good life insurance policy can ensure that your family will not struggle financially after you pass on. However, finding the best policy for your needs can take time and effort. Considering a few important points will help you to navigate the life insurance market and find the right product for your needs.
Do You Need Life Insurance?
Most people can benefit from buying life insurance in one way or another. Here are some things to consider when determining whether a policy is the best choice for you at this point in your life:
- If you have a family with financial dependents, a life insurance policy can provide for them after your death.
- If your estate needs liquid assets to cover debt and taxes without eroding your heirs' inheritance, a life insurance policy can provide that.
- If you want to provide funds to cover your funeral expenses, a life insurance policy can ensure nobody touches your other assets for that purpose.
How Much Insurance Do You Need?
Determining the size of your policy depends on several factors. You need to account for the age and stage of your dependents, the size of your current salary, and the state of your existing assets, including life insurance provided by your employer. Consider the following questions when calculating the amount of insurance you should purchase.
- How much money will my dependents need to cover their daily living expenses?
- Are there extra things I want to provide for my dependents, such as assistance with college tuition?
- What resources are available to cover my final expenses?
- Are there charitable organizations I want to support with life insurance payments?
What Type of Life Insurance Do I Need?
Life insurance is available in two basic types, each with its own benefits. Here is what you should know before buying life insurance.
Permanent Life Policies
Permanent life insurance should last over your entire lifetime, assuming you make your premium payments on time. These policies pay a death benefit to your named beneficiaries at the end of your life. They also usually include a separate component that functions like an investment account from which you can borrow or withdraw as needed. The cash value of the account fluctuates depending on the type of policy, the amount of your premiums, and the applicable investment performance.
Term Life Policies
Term life insurance provides coverage for a specified time. These policies can have terms ranging from 10 to 30 years. The premiums on term policies are generally fixed and do not change over the life of the policy. They also provide a guaranteed sum to be paid out at the end of life.
Life insurance is an essential method of providing financial protection to your loved ones in the event of your death. Do your research to create a life strategy and find the best policy for your needs.
About 1891 Financial Life
At 1891 Financial Life, we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.
Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.