Life insurance policies are an important safety net for your loved ones, should the unforeseeable happen. Unfortunately, only a little more than half of all Americans have such coverage.
If you are looking for a life insurance policy, there are many options to choose from. Which one is best depends on your income, debt, and stage of life. Navigating all these variables can feel overwhelming.
click here – When is the 2020 – 2021 FAFSA deadline?
The good news is that there are methods for categorizing and assessing this information. The basic life insurance guide below will help you do so. It covers everything you need to know about different life insurance plan options and how each fits with your unique financial planning needs.
Life Insurance Guide
There are two main types of life insurance. As the name indicates, a whole life insurance plan lasts the duration of your life. It pays out the amount stipulated in the policy, no matter how long you live.
Term life offers death benefits for a specific period. Typical policies are between five and 30 years and also have a set payout and premium.
One advantage of whole life is its cash value. You can withdraw funds that accumulate to the insurance plan value. This works like a 401(k) or an IRA, except you would pay taxes on any amount you withdraw.
Another advantage of whole life is the guarantee that your premiums will not increase. It’s also a guarantee that your benefits will not go down.
One big advantage of a term life insurance policy is that premiums will likely be much cheaper than whole life ones. It can save you money while getting you to a place where you and your family are financially secure.
For example, a 45-year-old might buy a 20-year term life insurance policy that will cover them until they pay off their mortgage paid and get their children through college. Paying the extra premiums beyond that date for a whole life payout may not be a good tradeoff.
click here – eToro Made Easy Smart Crypto Trading
How much coverage you should get depends on many factors, but the main one is debt and other financial obligations. A good rule of thumb is to consider major expenses that would negatively impact your family in the event you are no longer there to provide for them.
These can include anything from credit card debt to mortgages. You might also factor in college tuition for your children.
At the same time, you do not want to overextend. Having premiums that keep you from meeting your other financial obligations or goals is counterproductive. It is important to find a balance between a minimal amount of coverage that fits within your budget.
Another easy way to determine this is with an online life insurance guide. For many companies that sell life insurance policy calculator tools are available.
Find Life Insurance Today
Now that you have an idea of the main aspects of life insurance policies, you can determine which is best for your life circumstance. Having coverage will give you the peace of mind that your loved ones will be taken care of in the event of your absence. A reputable life insurance company will be able to advise you further on this difficult but important choice.
We hope you found this life insurance guide helpful. If so, be sure to check out our other insurance tips, as well as those on finance, law, business, and many other topics.