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Life and Health


By December 1, 2010No Comments

A 2004 study showed that up to 75% of those that died between 35-years-old to 55-years-old left their significant other without Life insurance coverage that was adequate.* This statistic might be attributed to the fact that many don’t like to think about an early death, much less the surviving family members being forced out of the home and liquidating all of the personal assets to afford the everyday cost of living.

The possibility of an early death, and the financial hardship that an early death might impose on other family members, is something that should never be ignored. Life insurance is a vital tool to prevent such potential circumstances from becoming a reality. The well-being and monetary needs of the surviving family members should be considered when choosing a type of Life insurance.

How to Choose the Right Life Insurance Coverage

The right decision is most always synonymous with an informed decision. Before you choose any specific policy or option, make sure that you understand what each type of Life insurance policy will cover and cost. Then, and only then, can you make a well-informed decision about what coverage will best suit your specific need and circumstance.

Term and Permanent Life insurance are two common types of Life insurance that you might want to consider. Term Life insurance is essentially a temporary form of Life insurance. It will provide coverage and pay benefits only during a designated or preset time period. On the other hand, Permanent Life insurance will provide coverage during the entire lifetime of the individual. It can also have the benefit of accruing a cash value over time. However, for the coverage to remain valid, premiums must be paid on time. There are benefits and drawbacks to each type of Life insurance; it really depends on the specific needs of the family.

You will also want to consider how much Life insurance will cover the needs of remaining family members. Number of family members, debt, future debt, and ability to afford the various Life insurance premiums will all play a role in how much Life insurance coverage is best.

It can be beneficial to make an outline of what your present monetary obligations and needs are and a prediction of what those needs and obligations will be in 5, 10, 15, 20+ years down the road. By combining this information with your total household income, you can determine the best amount of Life insurance coverage. At the very least, you should make a list of recurring monetary obligations: Mortgage, student loan, vehicle loan, credit card debt, etc. However, including future obligations, such as a child’s college tuition, will give you the most accurate estimate on how much Life insurance coverage you should purchase.

Be Prepared

Financial solvency for young families can be ensured with a Life insurance plan. However, even the best laid plan can become dated as life changes. So, part of being prepared also includes periodically reevaluating your Life insurance coverage.

*National Association of Insurance and Financial Advisors (NAIFA) 2004