Anyone with dependents should consider purchasing life insurance. Life insurance protects loved ones from the expenses associated with death, which can often be quite high. When purchasing life insurance policies, an applicant should consider his or her current debt load, personal budget, spending habits, short- and long-term savings, and the amount of income necessary to help survivors maintain their current standard of living. These numbers may be unexpectedly high, but they can provide a useful starting point for those who are shopping for life insurance policies.
Term Life Insurance
Life insurance is available in term and whole life policies. Whole life policies are an investment as well as coverage as they offer dividends and accrue cash value over the years. Although these can be a good choice for some people, most individuals and families opt for term life insurance policies. Term life insurance offers coverage and can be substantially less expensive than whole life. Both term and whole life allow their policyholders to lock in a premium rate, however, policyholders may be required to renew their policies at intervals with term life insurance. Still, the difference is well worth any perceived inconvenience.
When is Waiting a Good Idea?
In today’s economy, many families are having to cut corners to make ends meet. Adding extra expenses during an already-difficult time may seem like an unnecessary burden. Waiting to lose those last five pounds, to quit smoking, or until a bit more money has been put away for a rainy day may seem like a good way to save on premiums or ensure long-term financial stability, but it can result in negative consequences. Insurance rates continue to increase as applicants age. Health problems appear unexpectedly. Waiting can often cause more financial problems than it solves. The best time to purchase term life insurance is now.
Life Insurance for a Better Tomorrow
A term life insurance policy is not designed to provide financial security for the policyholder, it is designed to provide security for his or her beneficiaries. Common rules for purchasing life insurance are to purchase policies worth either between five and seven or between eight and ten times an individual’s annual salary. However, while this formula can provide a general idea of the amount needed, each family’s needs are unique, which means each individual’s life insurance policy’s needs are unique.
After death, a life insurance policy can provide not just the immediate costs for the funeral and burial but also cover the costs of day-to-day living. Mortgages, childcare, educational expenses, and retirement should all be considered. Life insurance can and should provide for the beneficiaries’ needs in these areas and help provide a more worry-free future.