Tips To Help Find The Life Insurance Right For You
What is insurance? Insurance is something you seek out to ensure your family will be able to continue on, if something catastrophic happens to you in the future. Life insurance helps your family maintain the lifestyle they currently have after some unforeseen demise happens.
The first thing to consider is the cost of funeral services. As of now, the average cost is right around $10,000. However, in 20 years the costs could double. You should seriously ponder that thought, when you are looking for insurance. Right off the bat, you absolutely must think about purchasing a minimal $20,000 insurance policy.
The next consideration is what you would want your policy prepared for. For example, if you are the sole contributor to your family’s income you should determine how much your family will need when the time comes. Maybe you make $50,000 a year, so you want to think about that. Obviously, you want to provide them with at least one year’s salary. That means you would want to set a policy for $70,000.
If you have children, you should think about setting money aside for educational purposes. A 2 year degree is probably going to run an additional $30,000. An individual making $50,000 a year, with one child, is going to want to set aside at least $100,000.
That is how you determine how much you need to set aside. Ask yourself, what do I need to set aside. Obviously, sitting down with an insurance agent is always the best idea when seeking out a life insurance policy.
That’s the how part of seeking insurance. Now, what type of policy is best for you. Life insurance consists of either term life or whole life(Cash value). Which one would be the best answer.
Whole life, cash value, is life insurance designed to cover your entire life. It’s the most expensive life insurance available, but if it won’t create any financial problems for you, then it is the best form to get. Whole life typically covers you until you are 99 years old. It has cash value after you have paid your premiums for a certain period of time. Meaning, maybe you have a policy written with a face value of $100,000. After about 5 years, your policy will begin accruing additional value. After you reach your retirement age, you could look into borrowing from the cash value of your policy or you just want to surrender your current policy. At that time, the face value of your policy could be $150,000.
I’ll explain why you may want to consider surrendering your policy at that time, a little later.
Term life is an inexpensive alternative to whole life. Term is exactly what is says. It is a policy with a set period of coverage. It doesn’t offer cash value, but it does provide a peace of mind. Typically, term life is offered in increments of 10, 20, and 30 years. Maybe you like the idea of having a cash value, but you can’t afford the whole life premium. If you are in your 20’s, you should consider purchasing a 20 year term. Your 30’s, you should look into a 10 year term.
Now, if you are 50 looking for coverage. You like the idea of having a whole life policy, but you don’t like the cost of your premiums. No problem, you should look into getting the longest term insurance possible and put the rest into an annuity. Your agent will be able to help you with that. By placing your money in an annuity, you are providing yourself with the cash value you wanted. On top of which, annuities have a higher interest rate than those of local banks. They are simple to set up and even easier to use.
So, if you currently have a whole life policy in place, you can transfer the cash value into an annuity. Then you may want to consider purchasing term life to replace the policy you just surrendered. Just a thought, but it will save you a bundle of money in the long run.
These are just a few tips to help you out. Locate an agent near you for more information. Unfortunately, I am just an agent licensed in Ohio. I wish I could help everyone, but I have to stick with Ohio…for now. Who knows, maybe we will cross paths later.