The non-profit organization Life Happens has designated September as National Life Insurance Awareness Month. They hope to make people aware of why life insurance is important and what it can do to protect your loved ones if there is a worst-case scenario.
Life Insurance Basics
Life insurance comes in two general forms; term and whole (also known as permanent). Term life insurance is a level of coverage that stays in force over a set number of years. As long as the premiums are paid, the policy remains in force. However, once the term is over, the policy expires and the coverage is no longer valid.
Whole life insurance is a permanent policy that also accumulates cash value. The life insurance benefit remains in force permanently as long as premiums are paid, and the policy can be cashed out or borrowed against if the policyholder needs access to the money.
Whole and term life insurance both have their advantages. Term is usually cheaper and it’s easier to obtain higher levels of coverage. Whole costs quite a bit more, but it can also build cash value as you pay your premiums.
Who Needs Life Insurance?
If you have people counting on you, you could benefit from life insurance. For example, if you have a family and you are the primary breadwinner, it could benefit your family if you had some level of coverage. Otherwise, if you should die unexpectedly, your grieving family could also be left in a financial hole. Even those without financial dependents should consider at least consider burial insurance. If you’re unsure whether you need life insurance or the amount you could benefit from, talk to a Direct Agent. We’ll help you see how simple understanding life insurance can be!
How Much Life Insurance Do I Need?
The amount of life insurance coverage needed will always depend on your individual circumstance. Some important questions to consider in determining this amount include:
- How many years will it be until your last dependent turns 18?
- How much would you need to replace your income until your last dependent turns 18?
- How much would you need to pay off all of your existing debt, including your mortgage and car loans?
- How much will a funeral and burial cost?
Where Can I Get Life Insurance?
The good news is that cheap life insurance is available through a number of insurers. As medical technology advances and people live longer, insurance actuaries continue to adjust the premiums downward. If money is tight, start with a smaller term life policy as it can give you the coverage you need without taking too big a bite out of your monthly budget. Shop around and obtain several quotes, then choose the insurer that has the best policy to fit your needs.