Life insurance is something that everyone needs, but not everyone has. These policies are put into place to protect your loved ones from any financial burdens you may leave behind in the event of your absence and cover the costs of your dependents’ living expenses and any of your debts.
There are many reasons people put off purchasing life insurance policies—for starters, it involves having to make tough decisions and have tough conversations with your loved ones. Many people also overestimate the cost of life insurance policies as well, and some people who have life insurance policies in place don’t actually have enough coverage. To kick off Life Insurance Awareness Month, we’ve outlined five quick things to consider when going to invest in a life insurance policy.
- Look into employer-provided coverage: Some employers offer a life insurance policy as a part of their benefits package, and if this is something your employer offers, make sure to double check how much coverage is offered with this policy. It’s recommended that you have coverage that’s 7-10x more your annual salary, and employers typically only offer 2x your annual salary. Checking into this coverage is important in knowing how much additional coverage you need to supplement this already existing policy.
- Consider your loved ones: Always think about your loved ones when selecting a life insurance policy. Will they be financially covered in the event of your absence?
- Figure out your coverage needs: The “DIME” method is a great start in determining your life insurance coverage needs. D (Debt: mortgage, private student loans, credit cards, car loans, etc.), I (Income Replacement: consider your dependents and if you want to replace your income for the rest of their lives), M (Mortality: burial wishes and costs), E (Education: do you want to fund education expenses for your dependents? What about child care?).
- Find the best policy to fit your needs: There are two types of life insurance: whole life and term life. Whole life does just as it says it does—covers your entire life. Term life policies cover a specific amount of time (10, 20, 30 years). These coverage options make it easy for you to tailor a life insurance policy to different family and financial situations.
- Talk to an advisor: Talking to an insurance advisor can give you a better understanding about which policy is right for your needs and your budget. Advisors can also work with you to bundle your life insurance with your home and auto policies, potentially saving you money in the long run.
Need help selecting a life insurance policy that fits the needs of your family and your finances? Contact one of our advisors below and start a basic quote request form!