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How to select insurance coverage for your needs

How to select insurance coverage for your needs

| September 27, 2021

Evaluate your options to select what is right for you.

Many people have misconceptions about Life Insurance. Some believe that it is more expensive than it actually is. Others think it is only for parents with young children. Life insurance can be a versatile tool to add to your portfolio as a protection for your family, assets, and legacy. Learn more about what to consider as you assemble your coverage strategy. 

How to calculate your coverage needs?1

You can calculate how much life insurance you need by adding your income (times the amount of years you want to be protected) + your current debts + your future financial commitments (like college costs for your kids and your final expenses) minus your liquid assets (like your savings and current life insurance coverage).

What factors determine your premium rate?2

In most cases, life insurance premium payments are less when you are younger and healthier. The most common factors that affect your premium rate include your age, gender (females typically get lower rates because of longer life expectancy), health status (determined by results from a medical exam and lab work), your family’s medical history, marital status, location, and lifestyle (i.e. smoker/nonsmoker, alcohol consumption, risky hobbies, etc.).

If you don’t have any life insurance, you’re not alone. 

Did you know 40% of adults don't have any life insurance coverage?1 Life insurance is one of those “someday” things for a lot of people, but you might not know that the cheapest time to buy it is probably right now.

To find out what kind of life insurance is the best fit for you and how much it will cost, start by assessing your current life situation – where you are in life? To do this, consider these following potential factors:

  • Do you have a spouse or partner?
  • Do you have children?
  • Do you have an aging parent or disabled relative who depends on you for support?
  • Does your household depend heavily on your income?
  • Do you think your retirement savings or pension won’t be enough for your spouse or partner to live on should you pass away?
  • Do you own a business, either solely or with partners?
  • Do you have a substantial joint financial obligation, such as a personal loan for which another person could be legally responsible after your death?

If your answer to any of these questions is yes, you may want to consider getting a life insurance policy. If you already have coverage, then any changes in your life may demand an update to your existing policy. 

What type of life insurance should you get?2

The chart below can help show you where you fit in life and what type of coverage might be the best fit for your needs.

  • Young and married with small children: young families need the most benefits from a life insurance policy because they need a greater amount of income replacement to cover the expenses for growing children. 
  • Young and married with no children: if both you and your spouse work and share household expenses equally, you may not need life insurance. However, depending on your lifestyle, it may be hard to maintain the same standard of living if one of you were no longer around.
  • Single with children: similarly to young couples with children, single-parents with younger kids also need a policy that provides a large death benefit. Term insurance is an option- that tends to be offered at a lower cost-for single-parents looking for coverage.
  • Recent empty-nesters: just because your kids are all grown up and out of the house, that doesn’t mean you no longer need life insurance. If your household runs on two incomes and you still have major debts to pay off like a mortgage, loan, or car payment, you need the protection of income replacement. Depending on your age, you may also have a while to go before you have enough retirement savings. You may want to consider a term plan that converts to permanent insurance or go straight for a permanent policy depending on your needs.
  • Retired senior citizen: if you have enough savings to get you through retirement and provide for your spouse if you die, then you don’t need life insurance. However, if you don’t, then getting a life policy may be necessary. You can get a term life insurance plan if you’re under 80, but if you need a policy that can help supplement your retirement savings, then the cash value from a permanent plan may be what you need.

Are you still unsure about buying life insurance, or do you suspect that your current insurance coverage needs to be updated? 
CONTACT US and we will be happy to assist you in evaluating all the factors and help you choose an appropriate policy.