We all want to make sure that our loved ones are provided for after we pass on. Especially when we have spouses or children, this is even more important. Life insurance is one way to accomplish this, as purchasing a life insurance policy will make sure that benefits are paid out after death to help defray the costs of your funeral expenses and potentially well beyond. Choosing the right type of life insurance is an important step to making sure your family is provided for after you pass away.
If you do not have any dependents and are not married, you may not require life insurance, or maybe just a small policy. It is possible to purchase a small life insurance policy that is just sufficient to cover the expense associated with your funeral and burial or cremation. Essentially, if you do not have others relying on you for financial support, a life insurance policy may not be necessary.
If you do need life insurance, you will have two essential choices: term life insurance or whole life insurance. Term life insurance is a policy that you will purchase at a set amount of time. These policies are typically sold for ten years, twenty years, or thirty years. You will pay the policies each month for the term for which you have purchased the policy. At the conclusion of the term, you will need to purchase a new policy. The premiums for a term policy are typically lower than those for whole life insurance.
Whole life insurance policies start immediately upon purchasing and you can continue to pay on the policy throughout your life. In some cases, but not all, whole life insurance can also be an investment, as you can draw money out of the policy. The premium rates for whole life insurance policies can be higher than those for term insurance as a result.
Choosing the right life insurance policy will also involve taking a look at your assets, debts, and standard of living. You will need to choose an insurance policy that will provide for your dependents’ care when your financial support is no longer there due to your death. For example, you may want to choose a policy that would provide for your children’s college education and pay off your mortgage. The amount you need to purchase will simply depend on your family’s lifestyle and what your dependents’ needs are likely to be following your passing.
We have helped many clients understand their estate planning needs, and we work closely with insurance agents that can help serve their life insurance needs. Contact us today at (651) 371-9117 to talk about your estate and what we can do to help you plan for your family’s future.