While it may not be an enjoyable topic, life insurance is an important element of your financial plan, as it can provide financial stability to your loved ones upon your passing. In simple terms, this type of insurance is an investment in the future for those who you choose as beneficiaries.
Life insurance can be a confusing topic, as policies can differ quite significantly. Here are the answers to 5 frequently asked questions (FAQs) associated with life insurance.
#1 Why Invest in Life Insurance?
Perhaps the most important reason to secure life insurance is to gain peace of mind. Because it is a contract between you and your insurance company, you can feel confident in the knowledge that your beneficiaries will be relieved of financial hardship in the event of your death.
#2 At What Age Should You Buy Life Insurance?
It is generally recommended that life insurance be purchased in your younger years. An important advantage to buying life insurance when you’re young and healthy is the ability to lock in a good rate. Life insurance increases in cost as your age increases, so consider securing life insurance earlier in life rather than later.
#3 How Much Life Insurance Do I Need?
When determining how much life insurance you need, first take a look at your current and future financial obligations. What does your monthly cost-of-living equate to and who is involved? Then, consider your future expenses like college tuition, medical needs, and end-of-life expenses such as those associated with a funeral. Once you’ve compiled all these expenses, you will be able to better estimate your life insurance needs. One simple guideline that many industry leaders recommend is to aim for 5 to 10 times your current annual salary.
#4 Who Can Be a Beneficiary of Life Insurance?
As the owner of a life insurance policy, you can name any person of your choosing as a beneficiary. Many people choose their spouse or life partner, but it is possible to name more than one person as a beneficiary. For example, you could leave a percentage to your spouse and divide the remaining percentage amongst your children.
It is a good habit to review your beneficiary choices frequently to avoid unwanted outcomes. As your life changes with age, consider those life changes that may impact your choice of beneficiary.
#5 What are the Main Types of Life Insurance?
Life insurance typically falls into two main categories, referred to as term insurance and permanent insurance.
As the name suggests, term insurance covers you for a period of time and includes a guaranteed death benefit. While there is no savings component, term policies typically offer the lowest monthly premium and are usually the best option if you have a limited budget.
On the other hand, more expensive, permanent life insurance provides peace of mind with life-long protection that never expires. Permanent life insurance premiums go toward both maintaining the policy’s death benefit and allowing the policy to build cash value. The potential for increasing cash value, or equity, is one of the more attractive elements for those who select permanent life insurance coverage.
Need Help Selecting the Proper Plan for You?
Life insurance can provide peace of mind and security for all stages of life.
At GWK Insurance, we take the needs of our clients as seriously as if they were our own. We are experts in helping you make the right insurance choices to protect the financial future for those you care about most.
Contact us today to start evaluating life insurance policy options that can help provide financial security for your family’s future.