Life is a beautiful journey full of surprises, joys, and challenges. Everyone takes a trip at a unique pace that offers paths and obstacles to follow. However, we all know that life is unpredictable and can sometimes cause significant financial losses to the ones we leave behind.
One part of planning for the worst-case scenario is finding reliable companies to purchase life insurance from. This financial safety net can protect your loved ones in the event of your unexpected death. It also ensures that your loved ones get the proper care, even if you're no longer there to provide for their needs.
If you want to financially protect your loved ones after your death, this article will enumerate five factors to consider when purchasing life insurance.
1. Determine the Timeline When You’ll Need Coverage
Like other significant investments, you must always consider how long you’ll need this financial safety net before purchasing from your local insurance companies. We can categorize life insurance into two types: term and permanent life (including whole and universal life).
Term life works best for those requiring coverage for a specific period. For instance, it's ideal for families while their children are growing or for the duration of their mortgage. On the other hand, advisors strongly recommend getting permanent life insurance for those needing coverage for their entire life, like burial expenses or for replacing their spouse's income.
2. Know How Much Life Insurance You Need
Before finding your local insurance companies, you must determine how much coverage you need. This step ensures you have the proper range to protect your loved ones financially should you die unexpectedly. It also means considering several factors like your income, debts, and the number of dependents.
You can determine how much you’ll leave behind with the “DIME” method. It means considering debts (like mortgage, student loans, and credit cards), income replacement for your loved ones, burial costs, and education expenses for your dependents. That way, you can plan for the financial impact of your death and ensure your loved ones get the proper care after your passing.
3. Consider Your Other Goals
While life insurance shouldn’t be a substitute for saving for retirement or paying for education, it can financially support your loved ones after your unexpected death. Therefore, you must always consider your other financial goals, like saving for retirement, paying for your children's education, and purchasing a home.
People can use permanent life insurance policies as savings because of their lifelong nature and ability to accumulate cash value over time. They include a death benefit and cash value that grows on a tax-deferred basis, like other savings plans. Regardless of what you'll do with your insurance coverage, you must determine how it can fit into your overall financial schedule.
4. Identify a Beneficiary
The beneficiary is the organization or person that will benefit from the policy. Insurance companies don't recommend choosing a minor as a beneficiary because they may not be able to receive the funds. Also, naming your estate as the beneficiary could lead to tax consequences.
In contrast, if you want your company to benefit from life insurance, develop a formal plan for using the proceeds. Moreover, speak with your independent agent to determine the best beneficiary choices.
5. Consult a Trusted Advisor
When buying life insurance, you must find someone who can guide you. Age and health will determine the rate you pay for coverage, with younger and healthier individuals paying less. The type of policy and death benefit size also affect your premium. Moreover, you can convert term life policies to permanent life insurance if needed.
Conclusion
Nobody wants to talk about death because it’s scary, but you must plan for it to protect your loved ones financially. You can help them be financially secure, should you experience an untimely death, by considering your needs and getting the right life insurance coverage from a reputable company, such as J.F. Shaw.
If you need a reputable insurance company in Marietta, GA, visit J.F. Shaw Insurance Agency! We're an independent company offering insurance to help protect your loved ones financially. Request a quote now!