We should all consider how we would support our loved ones if we died. One option is buying life insurance.
What’s Life Insurance?
A life insurance policy is a contract between you and an insurance provider. A lump sum payout to your beneficiaries is exchanged for regular premium payments if you die while the policy is active. So, life insurance protects your loved ones financially and gives them peace of mind.
Buying life insurance is like buying financial safety net for your loved ones. If you pass away, your life insurance provider will pay a lump sum amount to your beneficiaries. That can help pay funeral costs and other costs related to your death. However, you can use a cash value policy to pay for college tuition or other debt.
Why Life Insurance is Necessary
Here are a few reasons why life insurance is necessary:
– Provides financial security for loved ones if you pass away
– For funeral and other costs
– For any outstanding debts
For these and other reasons, life insurance is not simply for parents of young kids or dependant spouses. You can benefit from life insurance regardless of age or marital situation.
Also, you don’t have to die to collect on your life insurance coverage.
In case of disability and inability to work, the policy will pay a lump sum payment to help cover living expenses.
How Much Life Insurance to Get
There’s no one-size-fits-all solution to determine the appropriate amount of life insurance. It’ll depend on your personal situation. A reasonable rule of thumb is to buy eight to ten times your annual income in coverage.
Buying Life Insurance
The best would be to buy life insurance from an independent agent. An independent agent can help you locate the coverage that best suits your needs and budget. They’re unbiased, so they won’t recommend a policy only because it’s from their own insurance company.
Cost of Life Insurance
The policy’s cost will depend on your age, health, and the quantity of coverage you buy. Generally, life insurance is often quite affordable compared to the cost of not having it. Also, many workplaces provide inexpensive group life insurance coverage.
Life Insurance Types
– Term Life Insurance is the most basic type. It lasts for 10 to 20 years. The insurance expires at the end of the term and must be renewed to continue coverage.
That’s a good option for people needing coverage for a specific period. It has several advantages, including low premiums and extensive coverage options.
– Permanent Life Insurance is costlier than term life insurance. It also has a growing cash value that you can use as collateral for a loan.
Remember that there might be surrender charges if you cancel the policy. That’s an excellent option if you want lifetime coverage and a growing cash value.
What life insurance is best for you depends on your specific needs.
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FRANK URBAN is a well-known financial speaker and educator in Charleston, South Carolina, and is President and Founder of The URBAN Advisory Group LLC, A Registered Investment Advisor, URBAN Healthcare Solutions For Seniors and is a Federal Employee Benefits Specialist. His expertise is helping retirees and those soon to retire avoid common, costly financial mistakes. For over 30 years Frank has been advising retirees and pre-retirees, including past & present employees of the U.S. Government, Veterans and their families, and many past and current owners and employees of local businesses as well as those from out of the area who choose to relocate to Charleston.
He is/has been a member of the National Ethics Bureau, an organization that promotes consumer confidence by providing a source to verify business ethics for financial and insurance advisors.
Frank has lectured widely on financial topics, hosted a Safe Money and Retirement Radio Show on WTMA 1250AM and speaks regularly to investors in greater Charleston and the surrounding areas. He attended Northeastern University and served in the United States Marine Corps. Frank has 4 children, 9 grandchildren and 9 great-grandchildren and lives West of the Ashley with his wife Donna.
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