Life insurance isn’t usually in our daily thoughts, but it can be one of the most important financial choices you make, so thinking about it sooner rather than later is critical. Here are three tips that will help you as you think about which type of life insurance is right for you.
Understand your reasons for purchasing life insurance. When purchasing life insurance, most people think about their financial responsibilities, such as covering their mortgages and other debts. But, likely, you are purchasing life insurance for those you will be leaving behind, such as your spouse and children. What do they need to obtain financial stability when you are gone? For example, do they need the payout to cover your salary for several years or simply help with funeral expenses?
Determine the amount of life insurance you need. Investors are more likely to buy too little than too much life insurance. In fact, among those with life insurance, 20% admit they do not have enough, according to LIMRA’s 2018 Insurance Barometer Study. Sometimes this occurs because they purchase life insurance using an automated process (for example, one that says simply to buy X times your salary in life insurance). To avoid this mistake, we recommend you understand your life insurance needs and work with an experienced professional to fulfill them.
Buy the right kind of life insurance policy. There are many types of life insurance products on the market with varying features. These differences can have a significant effect on your beneficiary should you pass away. At a minimum, understand the difference between term life insurance policies (which cover a specific period) and whole life insurance policies (which cover your entire life), but there are many other nuances to life insurance as well.
Purchasing life insurance can feel overwhelming, so when you decide to buy a policy, it is always advisable to work with someone who understands your unique needs and can guide you through the selection process.
Please feel free to contact me for assistance. I’m here to help.