Those with no dependents or single individuals may not need life insurance, however it can make sense to purchase life insurance if you want to plan ahead and lock in your current health with a policy for the rest of your life. You however qualify for primary insurance that covers burial expenses; you can get this policy through your employer. If you however are married or a parent, getting life insurance would be the best step and decision for your family. Guardians too (mainly single individuals) qualify for life insurance as well. You could also get life insurance if you have siblings that depend on you. One of the main advantages of having adequate life insurance coverage is that your loved ones will get a lump sum should you pass away. Also, your funeral expenses are covered under this insurance as well.
DETERMINING THE RIGHT AMOUNT OF LIFE COVERAGE
You’ll need to get an adequate coverage to ensure your loved ones get enough to sustain them once you are gone. Some people struggle determining how much coverage they need. Your current financial status, marriage status, and lifestyle should, however, help you calculate how much your family will need. A good life insurance agent should also help you determine what will be enough for your family.
Other factors such as debts, mortgage, children’s education, etc. should also be considered before going for any coverage. Anticipated life changes, income increase/decrease, and long-term financial plans need be considered when shopping for life coverage too. One thing you need to know about life coverage is that you cannot buy the same coverage as your neighbor- needs differ.
Choosing the Right Policy
Once everything that matters in your life has been factored in, you can then start shopping for favorable life insurance policies providing coverage for the same, or even more. The best thing about life coverage is you only have two options to choose from. You only need to choose between term life insurance and whole life insurance coverage. These policies are designed to provide protection for either a specified amount of time or through the policyholder’s lifetime. Discussed below is a brief outline of each.
1. Term Life Insurance
This insurance policy is designed to offer protection for a specified time (years). Premium rates for term life insurance are considerably much lower as compared to whole life insurance premiums. Most individuals in need of this coverage choose between 10, 20, and 30 years, subject to renewal should the policyholder opt to extend the coverage. Some people, however, let the insurance policy expire especially if the anticipated risks aren’t there anymore.
Many of the individuals that buy term life insurance often have a savings plan for their family. The policy years purchased helps buy them time to save enough for the family, and all that it will need in the future. Term life insurance is also the most affordable policy you will find, hence accessible to low-income earners.
2. Whole Life Insurance
As the name suggests, whole life insurance is designed to provide coverage throughout a policyholder’s life. Policyholders, therefore, have to pay insurance premiums throughout their life. Many people consider whole life policies as an investment in that, the policy earns a certain interest, meaning you can draw some money out of it. Any amount earned through whole life insurance is tax-free, meaning your beneficiaries will get more compensation in returns. Whole life insurance premiums are however more expensive as compared to term life insurance. Most people choose to buy term life coverage and then invest the extra amount in mutual funds and other investments. Variable and universal life insurance are provided under whole life insurance.