When it comes to both Life Insurance and Health Insurance, there isn't one coverage that fit's all; your life circumstances are unique. CLH understands that, which is why we represent multiple companies with coverage selections for every stage of life you go through. Let us show you the best available life insurance and/or health insurance options that CLH has for you.
What Kinds of Life Insurance Are There?
There are many kinds of life insurance, but they generally fall into two categories: term insurance and permanent insurance.
Term life insurance is designed to meet temporary needs. It provides protection for a specific period of time (the "term") and generally pays a benefit only if you die during the term. This type of insurance often makes sense when you have a need for coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children graduate from college or a particular debt is paid off, such as your mortgage.
In contrast, permanent life insurance provides lifelong protection. As long as you pay the premiums, and no loans, withdrawals or surrenders are taken, the full face amount will be paid. Because it is designed to last a lifetime, permanent life insurance accumulates cash value and is priced for you to keep over a long period of time.
It's impossible to say which type of life insurance is better because the kind of coverage that's right for you depends on your unique circumstances and financial goals.
How Much Life Insurance Do I Need?
Unfortunately there is no hard and fast rule about how much life insurance one needs because everyone’s circumstance is different. However, as an independent agency, we’re able to tailor policies that fit your specific needs through the relationships we have with our various underwriters.
Having said that, there is some math that can be done to get an idea of what you might be able to use. Take a look at an example from Trusted Choice below.
For the following simple example, we will pretend there is no interest or tax. But in reality those factors will affect the amount of benefit your beneficiaries receive.
• You purchase a $500,000 life insurance policy.
• Upon your passing, your family spends $10,000 for your final expenses, leaving $490,000 to be divided up over the payout period for your designated beneficiaries.
• If the payout period is 20 years, the payments would be about $24,500 per year, or about $2,040 per month.
Again, interest and tax are not figured into this simplified example. What makes life insurance so confusing is that there are several different types of coverage, including term life and whole life or permanent life insurance. Additionally, the details of the policy you choose will be unique to your personal situation.
When Should I Buy Life Insurance?
It’s never too soon to buy life insurance. An important thing to remember is that life insurance premiums will be their most inexpensive the younger and healthier you are because you are at a lower risk of dying. The older you get, the more expensive the policies become.
One benefit of buying a short term policy at a young age is that you can lock in a preferred rate for 15 or 20 years. In this scenario, if you pull the trigger on a 20 year policy at the age of 30 and your health has decreased substantially by the time you’re 45 and you’re deemed a greater risk, you’ll still be paying the rate of your 30 year old and healthier self.
Another thing to consider when weighing whether or not to purchase a life insurance policy while you are young is your outstanding debts. A life insurance policy could pay your student loans or other large debts, as well as funeral expense if the unthinkable happens. This illustrates again how life insurance protects the people you leave behind so they aren’t stuck with the burden of tying up your affairs.
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Hopefully the above example provides some idea of what things you should considering when weighing how much life insurance to buy. We’ve been providing life insurance for families in Missouri, Kansas and Illinois for years and have the experience to guide you in your consideration should you feel compelled to reach out for a conversation on the matter. Call us today at 636.391.0700, email us at firstname.lastname@example.org, or click here to get started on a free quote.