The only two things certain in this life are death and taxes. You can hire a tax advisor to manage your taxes. While you cannot prevent death, you can certainly do something to make sure your loved ones are taken care of after your death. This is where life insurance can help. Life insurance provides a safety net for your family so that they are financially taken care of after the primary money earner is no longer in this world. There are several types of life insurance solutions available to fit the unique needs and situation of everyone. Below we will provide details on affordable term life insurance that can help provide coverage for a fixed duration.
What is Term Life Insurance?
A term life insurance is a contract between an individual and an insurance provider for a fixed duration, typically between 10 and 30 years. As part of this contract, the individual pays a fixed monthly amount to the insurance provider. In exchange, the insurance provider will pay specified amount to the survivors of the individual upon his death. When the term of the coverage ends you no longer have to pay the monthly premium, but you also do not get the insurance coverage.
What Type of Coverage Should You Look for?
When it comes to term life insurance you need to answer two key questions – 1) How much coverage do I need? 2) How long should this insurance last? Both are important questions that will determine whether your survivors are covered appropriately after your passing. Let’s look at each of these questions in detail.
How much coverage do you need?
The amount of coverage depends on your family’s monthly expenses, outstanding debt, and age of your children. You should get the coverage amount that will provide monthly income for regular expenses, cover outstanding debt, and additional expenses to put the children through college. Depending on your age, the amount of coverage will vary from typically 30 times income for people 18-40 years, and 15 times coverage for those who are between 51 and 60 years old. These is a simple rule of thumb. You should adjust the coverage amount based on your unique family situation.
How long should the insurance last?
You should ensure that the insurance lasts for as long as your family needs the income to sustain after you are no longer there to support them financially. At a minimum, it should provide sufficient money to for the children to grow up and graduate from college. It should also cover the financial needs of the spouse for the rest of his /her life. Again, you need to consider your unique situation to determine the insurance duration. It is better to err on the side of caution when determining the amount and duration of insurance coverage.
What Should You Look for When Buying a Term Life Insurance?
You need to consider several factors when purchasing a term life insurance. In addition to the premium cost you should also consider reputation of the insurance provider, ease of use, and available options to fit the needs of your family. No two families are similar. You need to study the unique needs of your family to determine what type of term life insurance you want to purchase.
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