5 Things You Need To Know About Life Insurance
When it comes to buying life insurance, people purchase for several reasons. Of course, there is the obvious one of leaving money for your loved ones to cover funeral cost and such, as well as to pay off debts, replace the person’s income, and as part of an inheritance.
So, prior to running out and buying some life insurance you should know a few facts about what it is and how it works. Here are five things you need to know about life insurance before you buy it.
1. What type of life insurance should you get: There are different kinds of life insurance, each with its own pros and cons. Term life is the most common—and generally the most affordable—it covers you for a set time. However, whole life builds value based on a set schedule—you can take a loan or make a withdrawal from your policy when you need to, but this could decrease the cash value and death benefit. There is also universal life which earns interest on the cash value of the policy while offering flexibility in monthly payments. And finally, there is variable universal life that lets you invest your cash value in the stock market. You can choose the one that’s right for you and your lifestyle.
2. People often buy life insurance for a variety of reasons: such as providing financial support in case of death, or to simply leave an inheritance. It can be an emotional benefit for the purchaser, as it gives peace of mind knowing that their loved ones will be taken care of financially if something happens to them.
3. Many financial professionals recommend at least 10x your
salary as a life insurance: When it comes to life insurance, there's no one-size-fits-all solution. You can pick an amount that meets the needs of your unique family.
4. Most employer-provided life insurance is not portable: If you're allowed to get life insurance through your employer, it's worth considering – the average American worker only stays with one company for four years (according to the Bureau of Labor Statistics, 2020). Getting a life insurance policy outside of work means you'll be covered no matter what.
5. Life insurance may not cost as much as you think: Though most people believe that life insurance is much more expensive than it really is, procrastination could end up costing you more in the long run. A $500,000 term life insurance policy for a healthy, 40-year old non-smoking woman could cost around $27 a month, but prices increase the longer you wait.
Consider getting a quick quote to see how much a term life policy could cost you. Plus, payouts to beneficiaries are typically tax-free, so that’s one less thing they will need to worry about.
To get a quick quote on how much a term life policy could cost, just use our free quoter at the top right of the page.
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