Do you have enough life insurance? How much is enough? Does everybody need life insurance, and why is it valuable? Most people learn about life insurance from a life insurance agent or salesperson, who just may have an interest in how much life insurance is purchased. Here, however, we want to provide you with some aspects of life insurance you very well should consider.
Two Broad Types of Life Insurance
Life insurance is available in temporary and permanent forms. Temporary, or “term” life insurance, covers the insured for a specific period of time or term. Those buying a home, for example, may want to buy an amount of 30-year term insurance to cover their mortgage should they die prematurely. Term insurance is also valuable to cover the life of a young breadwinner until their children are old enough to take care of themselves. Term insurance is the least expensive form of life insurance.
Permanent life insurance stays in effect as long as premiums are paid in a timely manner. While more expensive than term insurance, permanent insurance can build cash value that can be used years down the road for emergencies or opportunities.
Who Should Have Life Insurance?
The usefulness of life insurance is more far-ranging than most people believe. First, anyone who provides financial support for others should have life insurance. Permanent life insurance can serve as a starting point for a child’s future savings for a first car or college education. College students with debt should have life insurance as should those who provide care for their children.
Uses of Life Insurance Proceeds
Life insurance proceeds are generally used to cover final expenses, pay off debts and medical bills and provide ready cash for those left behind. They also, however, can be used to cover future college education costs for children, pay off a mortgage, and provide a means of support for loved ones.
How Much Life Insurance Do You Need?
This is a personal question with an answer that will be unique to everyone. If you have substantial assets and savings, you may just want enough to make life easier following your death, providing for immediate cash and to pay for final expenses. If you want enough to cover a mortgage, college, and living expenses for those left behind, you may want to consider several hundreds of thousands of dollars or more. The important factor is to only buy as much life insurance as you can afford. Life insurance that expires for non-payment doesn’t benefit anyone.
Is Life Insurance Expensive?
You should know that life insurance is at its least expensive when you are young and healthy. In your twenties, for example, term life insurance policies of a million dollars plus can be affordable. As mentioned, permanent life insurance is more expensive but has the built-in benefits of increasing cash value.
What Impacts Life Insurance Rates?
Life insurance rates are determined by the type of insurance (term or permanent), age, health, gender, lifestyle, height, weight and occupation, and hobbies. If you smoke, for example, you will pay more than a non-smoker. Don’t fib on your application, however, because it could void your coverage if found out.
Ask any insurance agent, and they probably can’t count the number of times they’ve heard “I don’t need life insurance. I’ll be dead anyway!” This is usually followed by a nervous laugh. The fact is that although life insurance will provide you peace of mind, it is really for those you love who are left behind. It can reduce at least some worry and stress during such a transitional and hard time, and that is a great gift.
At Fares J. Radel, we have been serving families in the Greater Cincinnati and Northern Kentucky area for generations. We have seen the benefits life insurance can provide for a family first hand.
If you have any questions about pre-planning your own final services we invite you to contact us. We would be honored to serve you and your family.
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