Reasons to buy life insurance range from estate planning to business continuation to protecting your family. This blog focuses on family protection.
Many people don’t understand why you buy something that you can’t use for yourself. The simple answer is that your not buying it for yourself, you’re buying it for your family. It’s like a really morbid Christmas present. Depressing as it it, it’s something that responsible parents and spouses should take care of and put behind them.
There are so many different types of life insurance policies out there, many people decide its easier to procrastinate than to try and break them all down. Procrastination is a mistake though, especially for a young healthy family. Take advantage of your good health to lock in a good rate. Life insurance can get spendy or even impossible to get if you wait until you develop health issues. It can cost more to buy dinner for two at Mcdonalds than it does to protect your family.
Once you decide to get it, you need to decide how much. Most experts recommend 7-8 times your annual income. Its been my experience that people usually buy about five times there annual income. If your spouse is unemployed, it can be harder to come up with a dollar need for their policy. I would say most people need at least a $50,000 policy (at a bare minimum) for a spouse that works in the home. It might be extremely inexpensive to increase that. Once you decide on the appropriate policy type, look at a few different coverage options.
On the most basic level, there are two different types of policies. They are term and permanent.
Term is inexpensive because it covers you for a specific period of time. The length of the term depends on how long you want to be covered for. The longer the term, the more expensive the policy. Once the term expires, the polices can get expensive fast, so don’t buy too short of a term. The majority of term policies lapse without payment from the insurance company to the insured, and that is why they are less expensive.
Permanent insurance is more expensive because this policy should pay out as long as you keep the policy in force and the company you buy it from is still in business when you die. I tend to lean towards term myself, but I also know that the best life insurance policy you can buy is the one that’s in force when you die (for your beneficiaries anyway). There are many variations of permanent insurance, but the biggest one is what kind of return you get on your money. Do you want a guaranteed rate, or a variable one. An Insurance Agent can go over those options with you to see what makes the most sense.
The easiest way to move forward with the life insurance is to contact an Agent. They can help you with a lot of your questions. If you are interested in the permanent insurance, look for an Agent who holds a securities license. They can offer you more options. You should also look for an Agent that works for a reputable company. Don’t buy a policy from a company that you’ve never heard of and might not be here in 5 years. If you live in Minnesota or Wisconsin, my staff or I would be honored to help you.
Thats all for tonight. -Rob
