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Life Insurance

No one likes talking about life insurance. So much so that 41% of Americans carry no life insurance at all. Ensuring your family and estate are covered in the event of your death is one of the most important kinds of coverage you can offer your loved ones. Life is unpredictable, but life insurance is a way to make sure you’re prepared no matter what.

 

What are the different types of life insurance?

While there are many types of policies, the two most common types of life insurance are term life insurance and whole life insurance. Your age, health and a number of other factors can help determine what type of policy best serves your needs. So what is the difference between term and whole life insurance?

 

Term Life Insurance

Term life insurance is usually the simplest and most affordable option. It pays the people you choose – a spouse, partner, children, or other beneficiaries – a fixed amount of money if you die during the term. The most common life insurance terms are 10, 15, 20 or 30 years.

Example: Say you purchase a 20-year term life insurance policy for $600,000 in coverage. If you die during that 20-year period, the insurance company pays your beneficiaries $600,000.

 

Whole Life Insurance

Whole life insurance (sometimes referred to as permanent life insurance) is a policy that doesn’t expire until you die or stop making payments. Whole life insurance has what’s called “cash value.” Think of cash value in the same way you deposit money into a savings account. It’s a pool of money you own. The longer the policy, with more investment, the larger the pool of money that you can access or borrow against.

The particular details about how much money beneficiaries receive and how the cash value grows depends on the various types of whole life insurance policies you can get.

 

How much does life insurance cost?

The cost of life insurance depends on a variety of factors. Whether you choose a term life insurance policy or whole life insurance, here are a few things that can affect the monthly cost:

  • Age (Cost is typically cheaper for younger, healthier individuals and goes up as you get older.)
  • Gender
  • Location
  • Lifestyle habits (Such as smoking, family medical history, etc.)
  • Occupation

 

How much life insurance do I need?

A general rule of thumb is that your life insurance policy should cover 10-12 times your yearly salary. While that can seem like a lot, an easy formula for determining the amount you’ll need is your Resources (income/liquid assets) – Financial obligations (expenses and debt) = recommended life insurance benefit.


 

Nov 6, 2017 5 Tips for Buying Life Insurance

 

Sep 1, 2017 4 Reasons You Should Update Your Life Insurance Policy

 

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