(This is a guest blog written by Jackie Waters)
Whatever type of insurance you’re considering, the main reason for buying it is to protect yourself and your family from financial loss that you could not cover on your own. In general, that means purchasing home insurance, car insurance, life insurance and health insurance. Here are some tips for keeping your family securely insured.
LIFE INSURANCE
When you have children, life insurance is important because it provides income for your family should something happen to you. If you have children at home, then it’s important for both spouses to have life insurance, even if one of you does not work outside the home. This is because if something were to happen to that spouse, you would have to pay someone else to take care of the children. The next thing to consider is what type of life insurance you need. There are two main types of life insurance.
TERM LIFE INSURANCE:
This provides a death benefit if you are deceased within a certain number of years, but will not provide any income if you live beyond that period.
PERMANENT LIFE INSURANCE:
Also known as a whole life or universal life policy, this type can be a combination of term life insurance and an investment account that pays out when you die, unless you liquidate it for the cash value before your death, but doesn't necessarily stop after a few years, possibly covering you for an entire lifetime. This type of insurance is initially more expensive than term life insurance.
HOW MUCH LIFE INSURANCE DO YOU NEED?
If you have children, bear in mind their financial demands. Don’t be tempted to buy more — or less — life insurance than you need. Calculate your current debt-to-income ratio, how much money you and your spouse will need to support your children through college, and the amount you’ll need to carry yourselves through retirement. If you need help with these financial projections, consult any agent or a “fee only” financial advisor. You can find one here. It can be extremely helpful to your family to pay off the mortgage and/or provide income for those payments if you aren't around. Bear in mind that life insurance can also allow you to give to charity/ies upon your death.
WHERE SHOULD YOU BUY LIFE INSURANCE?
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