Protecting The Ones Left Behind
Life insurance is one of the ways you can secure the financial future of your family should you no longer be there to care for them. Determine your life insurance needs, by considering the following:
How Old Are You?
Your age plays a role in your need and in the cost of coverage. Securing life insurance while you are young will mean more coverage for less money and it will keep your options open for future insurance. The younger you are, the less expensive this insurance will be.
Who are You Protecting?
If you have children to protect financially, you will want life insurance that will provide for them until they are old enough to provide for themselves -- usually beyond the age that they will earn a college degree or enter a career. If your children are young, you will need a longer term of protection; if they are teenagers you will need coverage for fewer years.
When providing for a spouse, considerations will have to be made for the income (if any) of that spouse, as well as their age, to determine how large the policy should be to provide adequate coverage.
If you have children with special needs, your coverage needs may extend to the end of their natural lives, which may require an even greater coverage need.
How Much Coverage Do You Need?
The needs of those you want to provide for will depend on your income now, as well as your potential future income. If you want your insurance policy to maintain them at their current level of financial income, your income is a deciding factor. If you plan to provide an insurance policy of a sufficient magnitude to enable them to live comfortably from the interest alone, you will need a much larger policy than if you want the payout itself to cover their needs.
Are There Other Financial Assets?
If you have other financial assets such as investments, social security, a pension, etc., you may need to carry less insurance to properly provide for your beneficiaries once you are gone. An insurance professional can help you to determine how to accurately calculate your "shortfall" needs and help you to find a policy to cover that shortfall.
What Financial Liabilities Do You Have?
- If you have children who plan to go to college, you will want to include college expenses.
- Any mortgages or other large outstanding debts should be added to the amount you want paid by your life insurance policy
- Funeral expenses are another consideration. Making arrangements well in advance will help you to know exactly how much those expenses will be.
Term vs. Whole Life Insurance - What Type Do You Need?
Term life insurance provides protection for a specified period of time at an affordable cost. Whole life insurance provides protection for your entire lifetime and accumulates a cash value that the owner can borrow against while still living. If you are young, you may want to investigate a term life policy. In either case, your age and health will impact the cost and the level of coverage you will be able to obtain. Premiums stay the same for whole life insurance, whereas term life insurance premiums increase as the holder ages. Determining which one you need, depends on how long you plan to carry the insurance and your personal situation.
Call us today to discuss your options and find the life insurance policy best suited for your current financial state and the future of your family. Life insurance isn't for you. It's for them.
For more information from the State of Kentucky on Life insurance, click here.