Buying life insurance for the first time can be overwhelming. You are probably asking yourself – How much do I need? What kind of policy is best? Who can I ask to help me find the right policy for my financial situation?
Take a moment to learn a bit more about life insurance policies before you sit down with your trusted agent to buy an affordable plan.
Benefits of Life Insurance
Life insurance is a financial contract with provides support for your dependents – a spouse, children or disabled individual – and can protect them from your debs in the event of your premature demise.
If you don’t have any dependents you probably don’t need life insurance yet. However, if your income is essential to the support of a family, you may want to protect them from any financial gaps that might occur if you no longer able to provide the same support.
What Type of Life Insurance Policy Fits You?
Before you purchase a life insurance, organize your current and projected after-tax income statements to determine the type and amount of coverage your family will need to maintain their lifestyle. The type of life insurance policy you purchase will determine the cost of your premiums while providing a variety of benefits based on your needs.
Some people need the most amount of coverage at the lowest cost to protect their family for a specific time – say, until the kids are financially self-sufficient. Others want easy to manage customized coverage for a wide variety of assets at any cost.
There are two basic types of life insurance policies: Whole and Term Life. And depending on the mortality risk and financial goals of the policyholder, both types of life insurance have their benefits.
Universal Term Life Insurance
Term life insurance policies are transitory – they only last for a specified period of time and tend to be less expensive because the policies often expire before the benefits are paid out.
- A set death benefit guaranteed for a specific term at a fixed low premium
- Come in 5-year, 10-year, 20-year and 30-year renewable contract terms
- Great for couples struggling to make ends meet but need to protected each other from the loss of your partners wages in an emergency
- Great if you have financial obligations which will end at a specific date in the future – e.g. kids go off to college or mortgage payments
- The premium is lost and a new contracted must be calculated if the policyholder outlives the term limit. At this time the premium will likely go up since your mortality risk increases as you age
Whole (Permanent) Life Insurance
Whole life insurance covers your dependents for your whole life until the day you die. And, these policies can be borrowed against for other investment or estate planning purposes.
- A death benefit guaranteed for your whole life or until you turn 100 years old
- Premiums cover all benefits with a portion of the payment being invested
- Great for high-income earners who want another secure way to saving money
- Great if you are worried about being ‘uninsurable’ in the future
How Much Life Insurance Do You Need?
How much money will your dependents need each year and for how long? The value of your life insurance policy is going to depend on the math. Review your expenses and try to account for the total amount is takes to support each of your family members.
Then speak with an Atlas Plus agent to pick a policy which is affordable and specifically addresses your family’s need. Our team of professional agents can analyze your situation to properly invest in a life insurance policy.
Protect your family after you’re gone and learn more about life insurance here.