A parachute can help break a fall in an emergency situation, but then must be carefully re-inspected or discarded if damaged. The airbags in your vehicle can only be used once and then must be replaced, but there is no doubt that they've saved thousands of lives. Band-aids not only assist in the healing process after injury, but they also prevent infection and are single use first aid items. Likewise, a life insurance policy may only be used once, but it could be one of the most valuable assets that you will ever own.
The Wisdom of Purchasing a Life Insurance Policy
Life insurance is sometimes referred to as part of an estate planning parachute. You may only use it once, but without the coverage in place, the results could be disastrous. There are several reasons to purchase a life insurance policy. If you have people who rely on your income to live, you definitely need life insurance. The proceeds from a life insurance policy can be used to replace lost income, pay off outstanding debts, and pay college expenses for children.
Life insurance can also be used to pay off estate, property, or business taxes that could otherwise be a burden to survivors. If you are a business owner, the payout from a policy can be used to buy out a deceased partner's share or to keep a business running. Finally, the death benefit from a policy can be used to pay the cost of a funeral, which can cost upwards of ten thousand dollars.
How Much Life Insurance Do You Need?
Figuring out how much life insurance you need isn't as difficult as many believe. A simple needs assessment can assist with this task. The actual amount of insurance that you purchase should be a combination of determining what your future income might be and your premium budget. A simple method of estimating policy limits is to take your current annual wage and multiply it by 15.
If you wish to purchase a term insurance policy, select a term length that will extend until at least the year of the policyholder's retirement. This is a simple calculation that doesn't take into account many extenuating factors so a more thorough needs assessment should probably be completed before you buy life insurance.
Understand your needs and your options when you purchase life insurance.
Understand Your Life Insurance Policy Options
Life insurance is surprisingly affordable. In fact, it's been found that consumers overestimate the cost of life insurance by almost three times. For most families, a term life insurance policy will be the best choice. If you would like an investment component added, along with some other benefits, you may also wish to take a look at whole life insurance. Regardless of your choice, life insurance is a sound investment and one that will protect your loved ones after a difficult loss.
Contact us to begin your simple needs assessment or to start a quote.