Life insurance is composed of several elements which can make it the perfect storm for miss-guided decision making. Many people fail to purchase enough insurance while others are paying for insurance that doesn’t fully address their family’s needs.
According to the Life Insurance and Market Research Association, more than 30 million Generation X and Y households surveyed reported that they needed more life insurance in 2012. One-third of wives own no life insurance at all. (money.usnews.com)
These figures are sobering, fortunately we have listed three critical points we believe will help refine your life insurance decision making process.
Determine whether or not you need life insurance. If you are young and without dependents, life insurance may not be right for you. Be wary if you are hoping to lock in lower premiums by purchasing life insurance at a younger age. Premiums are determined by your risk classification, gender, and age so purchasing insurance at a young age entails a longer period of premium payments.
Determine how much life insurance you need. The two basic ways to calculate this figure is through either income replacement or needs-based. Income replacement considers your earnings and age. Needs-based considers certain life elements which would be affected by your death. Elements include number of children, continuing mortgage payments, and if your spouse continues working.
Determine the type of insurance you need. Two basic types of insurance are cash-value insurance and term insurance. There is no investment component in term insurance and typically has lower premiums. Cash-value insurance can be an excellent tool however its package is much more complex.
If you have additional questions please don’t hesitate to call, our professional customer service reps are standing by to help!