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You want to confirm your family is taken care of during and after your lifetime.
Life insurance is a viable option.
It is natural to ask, How much life insurance do I need?
What Is Life Insurance?
Life insuranceis a contract between an individual and an insurance company.
The individual, also known as the policyholder, makes regular premium payments to the insurance company.
In exchange, the insurance company will provide a death benefit to the policyholders designatedbeneficiaryafter they pass.
The insurance payout to the beneficiary will happen only if the policyholder passes away during the term.
There is a cash component to this policy that grows over time.
Universal Life
Universal lifeis a permanent life insurance policy that provides an option for flexible premiums.
There is a cash value component that gradually increases over time and accumulates interest.
Variable Life
Avariable life policyis permanent life insurance that has aninvestmentcomponent.
Usually the investment is in mutual funds.
This is a riskier option because coverage depends on how well the investment does.
Why Do You Need Life Insurance?
Whether you need life insurance depends on your individual financial situation.
Cremations cost $6,300.
Life insurance proceeds can help families pay for funeral costs.
you’re free to choose to designate anyone as your beneficiary.
The policy amount may help a spouse, children or other dependents with education and daily living costs.
Replace Lost Income
If you were the primary breadwinner, theinsurance coveragecan replace lost income.
This can help maintain your familys standard of living.
Pay Off Debts
Life insurance proceeds help to pay off debts you incurred during your life.
The proceeds may pay off a mortgage or help with credit card debt or other loans.
Younger people will lock into lower rates on alife insurance policy.
The assumption is that a younger person is relatively healthy and will not become sick in the near future.
Some preexisting conditions may cause denial of life insurance or requirehigher premiums.
Occupation
What you do for a living can impact your life insurance coverage.
Professions like construction workers, pilots and firefighters face more risk on their job.
Their premiums will likely be higher than someone who works in an office.
Hobbies
If you participate in high-risk activities,life insurance companiesmay charge you more.
Activities like bungee jumping, skydiving and smoking substantially increase your risk resulting in policy restrictions and higher premiums.
Financial Responsibilities
The more debt you have, you will likely need a policy with extensive coverage.
Higher-end policy coverage leads to increased premiums.
If youre responsible for dependents, you will also likely need more coverage.
Policy pop in
The pop in of policy you choose also impacts your coverage.
Aterm life insurancepolicy is for a specific term and therefore cheaper than a whole life policy.
How Much Life Insurance Do I Need?
Determining how much life insurance requires evaluating your financial responsibilities, dependents needs, current and future expenses.
Evaluate Your Financial Obligations
2.
Account for Income Replacement
3.
Plan for Any Future Expenses
4. Review Current Assets
5.
Determine what jot down of insurance policy works, and calculate your life insurance based on your budget.
FAQ
Takeaway
Finding and working with a financial advisor is a great idea.
A financial advisor will help keep track of your finances and assist you in attaining your financial goals.
Get to know your Financial Advisor options today for Free!
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