When to Consider Life Insurance
Many people think that they don't need to get life insurance, either because they are too young or because it is too expensive. In fact, a recent study found that only one-third of Americans currently have life insurance, which is the lowest number in the past 50 years. (http://www.iii.org/media/facts/statsbyissue/life/) This number is truly alarming, as life insurance is a priority for all people to have -- no matter their age.
What is life insurance?
Life insurance is a way to ensure that your family is financially secure if you pass away unexpectedly. It may seem morbid to think about, but it is important to ensure that in the event of your death, your family is taken care of. There are several different types of life insurance policies, but most people commonly think about it in terms of a death benefit, which is known as term life insurance. With this type of policy, the owner makes payments to the life insurance company. In return, the company offers a benefit that is paid out to the policy's benefactors in the event of a death.
Other types of life insurance allow for people to withdraw the money before death. Universal life insurance, for instance, allows for people to request payments of any amount (within government stipulations, of course) at any period in their life. These policies can also be liquidated as they carry a cash value. In addition to helping secure the family's finances, life insurance can help protect an estate or mortgage. Many employers today also use it as part of their benefit packages.
When should I consider buying life insurance?
Because of the various uses of life insurance, many industry experts advise that people should buy it as early in their life as possible. Some companies, such as Gerber, even offer life insurance plans for parents to purchase for their babies. It is smarter for people to buy life insurance at a young age, rather than waiting until they are older as this will help ensure that the premiums are lower and that the policy will come to term sooner rather than later.
Additionally, it is recommended that people don't wait until they have children to purchase life insurance. Often times, this is what happens as people focus on their financial security once they have dependents. However, this will drive up the cost of the premium.
Why should I buy life insurance?
Many people think that they are invincible. Because of this and other reasons, they refuse to think about their death which is why they don't consider life insurance. However, it's important to think about this and to know that your family is taken care of in case something like this happens. Even if you don't pass away unexpectedly, life insurance can help provide financial security to your family in the future as it can serve as a financial asset. For instance, if you are ready to retire early, you will have that option if you have a life insurance premium because it can serve as additional financial security in the future.
How do I buy life insurance?
Unfortunately, buying life insurance isn't as easy as walking into a store and picking it off the shelf. It can be a complicated process, comparable to buying car insurance. Like car insurance, life insurance policies have different benefits and premium amounts. You need to design your own based on your age and other characteristics. However, by dedicating time upfront to determine the best life insurance policy for you, you can guarantee that your investment pays off for you and your family in the long run.
The first thing to determine is the value of your life insurance policy. Most experts recommend buying between 3.5 - 15 times your annual income. However, it's also important to consider your outstanding debts when considering the amount of your policy. If you have more debt, your life insurance policy should have a larger value.
From there, it's important to decide what type of insurance and how long the term of the policy will be. Most industry experts recommend term life insurance because it will give you an option to secure your family's finances for a set period of time. For instance, if you have children who are five and seven years old, it may be best to get a plan that is at least 15 years to term to ensure your family's financial security until they are at least 18 years old.
Once these details are figured out, it is important to find the right agent to work with. Finding an agent who you are comfortable with and who you trust is imperative to find the life insurance policy that works best for you and your family's needs. Once you've selected an agent to work with, it's important to sit down with him or her and explain your needs and what type of insurance you are looking for. They can also provide insight as to what type of insurance you should be looking for and why.
Onverall, there are several things to think through when choosing life insurance. As there are several different types of life insurance, it's important to find the one that works best for you and your family. However, no matter your age, it is important to look into life insurance to ensure that you are secure now and in the future.