Four Ways to Help You Decide What Life Insurance Policy is Right for You
NEW YORK, April 8, 2022 (Newswire.com) - iQuanti: Life insurance can be a smart choice if you want to make sure your loved ones are taken care of financially after you die. In the event of your passing, your beneficiaries can receive a death benefit that can help them replace your income and pay down any debts. If you've decided to buy a life insurance policy, it's important to evaluate several aspects of each policy and consider your own financial situation. Let's dive deeper into four factors to consider when looking for a life insurance quote that works for you and your loved ones.
1. Consider how much coverage you need
The first factor you should consider is the size of the death benefit you need. When calculating how much life insurance you need, a rule of thumb is that the death benefit should be seven to 10 times your current income. But the amount that works for you can also depend on how many beneficiaries you have. For instance, if you have a spouse but don't plan on having children or your children are independent adults, you may be able to choose a lower death benefit. On the other hand, if your children haven't grown up yet, you should consider getting a higher death benefit to ensure they're covered until they're out of the house.
2. Consider how long you want coverage
Term life insurance has a fixed term length of 10 to 30 years. If you outlive the term length, you'll have to get a renewable policy or get a new policy when your existing one expires. Term life insurance may work well for those who only need coverage for a specified time period. For instance, a term life policy may make sense if you have young children and want to provide them with added financial protection until they're adults.
On the other hand, permanent life insurance provides guaranteed, lifelong coverage as long as you pay your premiums. This can make permanent life insurance a good choice for policyholders who want lifelong coverage and the ability to provide financial support after they're gone.
3. Compare costs
Life insurance policies require you to pay monthly premiums to maintain coverage. There are many factors that affect premiums. For example, you will likely pay higher premiums for a higher death benefit. Premiums also vary across the type of policy selected as well as across different carriers.
For instance, term life insurance premiums are often more affordable than many permanent life insurance premiums. Depending on your budget, a term life insurance policy may be a better choice. But keep in mind that permanent life policies offer lifelong coverage, while term life policies will only last a specified term.
If you'd like to pay affordable premiums and have lifelong coverage, you may want to consider final expense insurance. This type of permanent life policy covers end-of-life costs and comes with lower premiums since the death benefit is smaller.
4. Consider your financial needs
Permanent life insurance policies come with a cash value growth component. Part of each premium you pay will go toward your cash value, which earns tax-deferred interest. And depending on the type of permanent life policy you have, you may be able to withdraw or borrow from the cash value to access these funds while you're still alive.
This component can help you build wealth and a nest egg that's accessible during your lifetime.
Term life insurance, on the other hand, does not have cash value. This type of policy may work better for those looking for a straightforward policy with a death benefit.
The bottom line
When getting life insurance quotes, you should consider several factors to make the right choice for you and your family. It's wise to weigh your coverage needs against policy costs and determine what your financial needs are. Take some time to evaluate each factor and then compare insurance quotes from multiple insurers to help you secure a policy with great coverage at the right price.
Source: iQuanti, Inc.