Are you one of the 52% of Americans who think life insurance is too expensive? Or maybe you’re one of the 12% who doesn’t know how much coverage to get.
These reasons are no excuse for not protecting your family after you pass away. We’re going to go over the essential life insurance questions so you have the answers you need to purchase life insurance.
Keep reading to learn how much insurance you need, the different types of policies available, and key features to look out for.
How Much Life Insurance Should I Buy?
The answer to this question will be different for everyone. Figure out your total current financial obligations. This should include your mortgage, car payment, monthly bills, and childcare.
Now think about what financial obligations your family will have in the future. This will include college tuition and retirement.
Use these totals plus the length and type of policy to determine what an appropriate amount of insurance is for you.
What Type of Policy Should I Buy?
You have two options here: term life or permanent life insurance. With term life insurance, you’ll select a period of time you want to have the insurance and the amount of coverage. You’ll then make monthly payments for the life of the policy.
For a permanent policy, you’ll have an insurance policy for as long as you live. This kind has the potential to build cash value.
What Are the Types of Permanent Life Insurance?
There are four types of permanent life insurance policies: universal, whole, indexed universal, and variable universal. While all of these policies accrue a cash value, they vary in how that cash gets invested and if the cash value will affect your policy premiums or benefits.
There’s also an option of limited pay life insurance. With this type of policy, you get the benefit of a lifetime of coverage, but you only pay for a specific number of years.
Who Should I Make the Beneficiary on My Policy?
Your beneficiary is the person who will receive the money when you pass away. You can pick a person or an entity. Most people choose their spouse, sibling, parent, or child.
What Happens If I Miss a Payment?
If you miss a payment, then your term life insurance policy can lapse. If you think you’re going to miss one, you need to talk to your insurer. You may be able to use the value of the policy towards your premium.
Another option would be to halt or reduce your payments temporarily. To do these options, you’ll need to have a cash value accumulated.
There are also state-regulated grace periods to prevent your policy from lapsing if you’re late on your payments. The length of this period can vary from state to state and company to company. Check your policy for your exact grace period.
Your Life Insurance Questions Are Answered
Now that you understand the basic life insurance questions, you’re ready to start shopping around for your policy. Start by figuring out how much coverage you need and how long you want it for.
Then, you can compare policies to find the one with the right features and benefits for your situation.
Browse our other blog posts for more helpful advice in all areas of your life.
