Life insurance is a necessary investment, especially for people with children. Life insurance can be a lifeline for a family in the aftermath of a tragic event. When people have sufficient life insurance coverage, they can rest assured that their family and their home will be taken care of well into the future.
MIG, an independent insurance agent working in Maryland, Virginia, Pennsylvania, and D.C. lists nine tips to get the right policy and explains the reasons why families and individuals should carry life insurance policies.
1. Get Life Insurance Early
To save money on a policy, it is recommended that you are insured at a younger age. If you establish your policy at a younger age, you are less likely to be afflicted with problems associated with aging that will increase your premium. You are able to lock that low rate in for the remainder of your life, and you are always able to make changes to the policy later on if you would like more coverage.
Getting insurance before age 35, or in some cases up to 40, can be a cost-saving move for you and your family. You can also open life insurance policies for your young children and lock in premiums at a low rate so that they are able to save money in the future.
2. Funeral Expenses
Even if you are single and do not carry a large policy covering an entire family, you should carry enough life insurance to pay for your final arrangements. Funerals, even cremations, are expensive affairs. Having to pay final expenses out-of-pocket while you are grieving over a loved one’s death is a terrible situation.
By opening a burial insurance policy, you can make sure your loved ones are not burdened financially after your passing.
3. Cover All Debts
Especially if you have a family, you may want to make sure that your life insurance covers all of your outstanding debts. These debts include but are not limited to loans, mortgages and credit cards.
Death does not cause debts to go away. Your heirs will be left holding the bill if you die without life insurance. This could cause financial ruin to a young family with few resources. Life insurance that covers all of your debts can be an important investment in your family’s future.
4. Leaving an Inheritance
If you do not have any other assets, a life insurance policy can provide an inheritance for other family members. This can help to pay for their education as well as their regular yearly expenses. Everyone wants to know that they will have money left over to pass down to their surviving family.
By keeping your policy updated as your family grows, you can make sure you are able to leave a legacy to your loved ones.
5. Insurance Purchased Through Work is Not Sufficient
Many employers offer life insurance policies, but these small policies are rarely enough to cover you in case of tragedy. These policies should be thought of as bonus coverage, not the backbone of your family’s financial future, says MIG. Also, it is important to keep in mind that you will not be able to transfer this policy if you quit your job or are fired.
6. Life Insurance Can Save your Business
If you are the owner or CEO of a small business, it is wise to carry a large enough insurance policy to cover at least a year’s worth of your budget. This will keep your business afloat in the event that you pass on.
Many small businesses go through difficult times if their owner or CEO passes away suddenly. Life insurance can help a ensure that a business will be secure while they make the transition to different management.
7. Life Insurance for Stay-at-Home Parents
The need for life insurance is not restricted to the primary wage earner in the household. Stay-at-home parents should also be insured. In the event of their passing, someone will have to care for the children. If this is paid for, it will allow the surviving spouse to move forward with their life and provide for the family.
It is wise to have at least five years’ worth of the primary breadwinner’s salary in the form of life insurance. For the stay-at-home parent, calculate how much childcare or college expenses may be for at least five years. This will give your family a chance to get back on its feet.
8. Savings to Borrow Against
If you have a whole life insurance policy, you can borrow against it tax-free. This can help to supplement your retirement income. It is wise to check on the fees that are associated with these withdrawals.
If you have an emergency in your home such as an unexpected hospital bill or if your car stops working, you can take money out of your life insurance to pay those bills. Having the policy there gives you an extra level of financial security, even during your lifetime.
9. Providing Peace of Mind
No matter how young or healthy you are, life is a risky endeavor. You may believe that your life insurance policy will be used far in the future, but it is possible that it will be needed sooner than you think.
Everyone comes to the end of their lives eventually, and it is important to have life insurance to cover your loved ones’ expenses in the case of a tragedy. MIG reminds families that insurance can also provide a nest egg for your survivors, meaning that they can set themselves up for financially healthy lives.