Insurance is an expense that most people do not want to have, but it is an essential investment. Certain types of insurance, such as automobile and motorcycle, are required by law, especially if you have a loan on a vehicle or a home.
Life insurance may not be required, but perhaps it should be because of its many benefits. Unfortunately, more than 40 percent of Americans do not have ANY form of life insurance. If you are ready to purchase a life insurance policy, help is available. Here are a few tips to make the purchase of life insurance a little easier.
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Understand the Benefits
Life insurance is a worthwhile investment, so to help you understand why you need to know its benefits.
One of the main benefits of life insurance is the ability to cover the cost of your funeral expenses. Funerals and burials can cost thousands of dollars, so providing your loved ones the money to cover these expenses is crucial.
Life insurance can also provide financially for your family after your death. This insurance will be even more important if your family relied on you and your income for basic living expenses. With sufficient coverage, life insurance can pay off a mortgage and any other outstanding debts in addition to education costs for any children.
You may not have to deal with financial distress after you pass away. However, life insurance will give you peace of mind in knowing your family will have the means to handle not only your final expenses, but also ordinary bills, debts, and everyday expenses.
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Determine the Coverage Amount
Once you understand the benefits, you can begin shopping for life insurance coverage. Determining how much life insurance your family will need after your passing can be challenging since there are so many factors to consider. There are many calculators available online, but ask yourself two important questions to help you determine the total amount of coverage your family will need.
First, estimate the amount of money your family will need to cover immediate expenses after your death. These immediate expenses will include funeral and burial costs, medical bills, your mortgage balance, outstanding debts, and fees to settle your estate.
Next, determine how much money your family will need to sustain the household after your death. This total should include the income your household will lose when you pass away and how much money the family will need to continue paying basic living expenses for an extended period of time.
It is also important to remember that your monthly or annual premiums for the insurance will be based not only on your age at the time of policy purchase, but also the death benefit total and the policy type.
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Choose the Policy Type
Lastly, you will need to choose what type of life insurance policy you want to purchase. In most cases, you would choose between a term and whole life policy. Knowing the key differences will help you determine which is right for you.
A term life policy insures you for a specific term. If you purchase a 20-year term policy, you will be insured for 20 years. At the end of the term, you can choose to renew for another term or convert to a whole life policy. If you pass away during the term period, the death benefits will be paid to your beneficiaries. When you renew, the premiums will most likely increase because you will be older.
A whole life policy insures you for your whole life as long as your premiums are paid. There is no worry of the premiums increasing and the policy will accumulate cash value over time, making it a great financial investment. Because of the fixed premiums and cash value, whole life premiums are higher than term life premiums.
The purchase of life insurance may not seem fun or exciting, but it is still important. To purchase life insurance, contact Callis Insurance today.
