When is The Right Time For Life Insurance? Sooner Than You Think….

by Jeff Rose on August 22, 2012 · 0 comments

This post is to support the Life Insurance Movement.

No one really wants to buy life insurance. Why would they?

You can spend your money on other stuff that you really enjoy. Plus, with life insurance, you always think about the “worse case” scenarios. How pessimistic!

The only time really start thinking about life insurance is when certain life events occur. Whether it’s the birth of new child or you lose someone close, it’s these type of events that get the wheels turning.

Just as many people between the ages of 30 and 50 lack a will, many also lack life insurance. A March 2011 survey from Genworth Financial and the University of Virginia’s Darden School of Business found that almost 70% of single parents and 45% of married parents were living without any coverage.

Why do so few people actually buy life insurance?

Shopping for life insurance may seem confusing, boring, or unnecessary. Yet when you have kids, get married, buy a house or live a lifestyle funded by significant salaries, the need arises. The main reasons people buy life insurance are because they feel a need to provide financial security for the future of their family, and it also provides a peace of mind knowing your family will be taken care of if you die.  Here are a few reason to buy life insurance

  • Provide for your final expenses
  • Money for your family’s living expenses
  • To replace your income
  • Pay off your home loan

It doesn’t have to be hard to find

There are two basic types of life insurance: term and cash value. Cash value (or “permanent”) life insurance policies offer death benefits and some of the characteristics of an investment – a percentage of the money you spend to fund the policy goes into a savings program. Cash value policies have correspondingly higher premiums than term policies, which give you death benefits only and have terms of 10 years or longer.

Term is a great choice for many young adults because it is relatively inexpensive. There is an economic downside to term life coverage: if you outlive the term of the policy, you and/or your loved ones get nothing back. Term life policies can be renewed (though many are not) and some can be converted to permanent coverage.

How long do you have a policy for?

If you don’t want to pay premiums on an insurance policy for more than 10 years, then term life stands out as the most attractive option. If you are just looking for a short-term hedge against calamity, that’s the whole reason behind term life insurance. If you’re getting into estate planning, then permanent life insurance may prove a better choice.

Life insurance is NOT expensive

Premiums on 10-year level guaranteed term policies are some of the cheapest life insurance you can buy and all of the best life insurance companies carry them. Just to give you a ballpark example, a 40-year-old woman could potentially line up $250,000 in coverage through one major insurer for a premium of $16 a month in August 2011. The cost and availability of life insurance depends on such factors as

  • age
  • current health
  • type and amount of insurance purchased

Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insured by having the policy approved. There are also expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications.

Not sure what life insurance is best for you? Don’t go at it alone. Consult a professional, but first get a free quote here to make sure you’re getting the best price.

 

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