Have you thought about life insurance lately?
Life insurance? Isn’t that for people who are old and going to die? I don’t need life insurance; I am young and healthy. Life insurance is expensive.
Those are the typical responses to the life insurance question. But really, it’s not the right answer.
Life insurance isn’t for people who are going to die; it’s for the people you leave behind.
Life insurance is not a fun thing to think about—most of us don’t like to be confronted with the reminder that someday we’ll die (though hopefully not for a VERY long time)—and to many people it seems like an unnecessary expense.
But life insurance is important and it’s something nearly everyone needs to consider—and considering it sooner nearly always costs you less than later.
The purpose of life insurance is to protect those who depend on you for financial support and to keep your death from becoming a financial burden to them. After all, the emotional burden is hard enough. Life insurance can cover critical expenses like your mortgage, your burial and funeral expenses, any outstanding debt you may have, and help those who were dependent on you to continue on with their lives without experiencing sudden financial hardship.
There are many options for life insurance and they can be confusing, so here is a quick primer on the basics of life insurance.
Types of Life Insurance
Term: This is the simplest and generally the cheapest form. You buy coverage for a specific period of time. It can usually be renewed, but premiums will increase based on age and health factors. There is no cash value.
All other types of life insurance are permanent, but there are several varieties. They all include a savings element that builds cash value, in addition to the death benefit. Once that cash value accumulates, it is accessible to the policyholder tax-free. The following are some of the common types of permanent life insurance.
Whole Life: You purchase this policy to cover your entire life, as long as you keep paying premiums. Premiums remain constant throughout the policy, and the company invests a portion of your premium that becomes the cash value. These are more expensive than term policies in the early years, but they even out because the premium does not increase.
Universal Life: This policy is similar to whole life, but has the potential for higher earnings on the savings component. It is more flexible in terms of changing premiums and face value throughout the policy. There is usually a guaranteed return on the cash value. Disadvantages include higher fees and the possibility of increasing premiums.
Variable Life: A variable life policy generally has fixed premiums, and you have control over the investment decisions for the cash value portion. However, this is riskier because there is not guarantee for the cash value.
How Much Life Insurance Should I Buy?
This is one of the most complicated decisions in life insurance for many people. How much is enough? How much is too much? Can there be too much? What can I afford? Many people decide based on an income replacement calculation, between 5 and 10 times the amount of your current income.
Think about your personal circumstances: Is yours the sole income in your household? Are there other expenses, such as college tuition, that may arise in the future? Don’t forget to include potential medical and funeral costs. Above everything, you want to be sure your family does not get stuck with bills, debts or expenses that they cannot afford. Depending on your needs, you may want to consider buying supplementary coverage beyond what Roper Insurance offers.
Why Should I Purchase Life Insurance Now?
Buying life insurance may seem unmanageable right now, but it could be a smart decision. Unlike many other benefits, life insurance is actually more affordable right now than in the recent past. Plus, during this challenging economic period, ensuring that your family will be financially secure in the future is more important than ever.
For more information about life insurance, and for help in finding the right plan and right amount of coverage for you and your family, call our life insurance specialists at Roper Insurance now at (303) 721-1145 or use the handy contact button at the top of this page to send us a message.