Life Insurance 101
Nobody enjoys talking about death. We don’t even like to think about it, rather, we act like we are going to live forever. However, if we think about the legacy that we will leave behind, it starts with how we cared for those that we loved while we lived but also in our death. Nothing says “love” like life insurance because you are making sure the financial needs of those you love are taken care of even after you are gone.
Because life insurance is a key part of your financial plan, it’s important to make a smart, informed decision before purchasing coverage. Consider the following questions when shopping for the right fit for you and your loved ones:
- What type of life insurance should I buy?
- How much coverage do I need?
- Do I really need life insurance?
Types of Life Insurance
Term life insurance is likely the most budget-friendly life insurance coverage available. It covers you for a period of time, known as a “term” of usually 10, 20 or 30 years. Additionally, some policies have premiums that never increase throughout the term. The application process is generally easy and in some cases requires no medical exam. With term life, you decide how much you can afford in policy costs and the length of time you need to be insured.
Permanent life insurance is typically more costly and complicated but offers additional benefits such as cash value growth and the ability to borrow over time. While whole life is the most common permanent life policy, others include universal, variable and variable universal.
How much coverage do I need?
While industry experts suggest you need 7 to 10 times your annual income in life insurance coverage, the amount you need really depends on two factors: your current net worth and your loved one’s lifestyle and future needs. Start by taking an inventory of your assets (savings, retirement accounts, real estate, etc.), then subtract your debts (mortgage, auto loans, credit card or student loan debt) and identify your net worth (assets – debt = net worth). If your net worth is negative (you owe more than you own), you’ll likely need to secure coverage to pay off your debts and to cover funeral expenses. Next, figure out what future expenses will be for your loved ones. Consider factors like housing, health insurance, college costs or assisted living expenses (for older adults). Finally, combine the amount you need to cover current and future expenses and choose the coverage that fits your loved one's needs and your current budget today.
Do I really need life insurance?
If you’re single with no dependents and you have enough savings to cover funeral expenses, you may not need life insurance coverage. It really depends on the ones you’re leaving behind. If your loved ones rely on your income to cover living expenses, and your net worth is insufficient to cover future costs and existing debt obligations, you likely need some amount of life insurance coverage.
It’s easy to put off the decision to purchase life insurance. After all, life insurance is not required by banks or the Department of Motor Vehicles like home and auto insurance is. No doubt, it can easily be pushed aside in your financial plan as less of a priority. While no one ever wants to think about end of life planning, it is one way to leave a legacy of love. Including life insurance in your financial plan can eliminate the financial devastation that can ensue for your loved ones when you're gone.
If you love someone, tell them, and then ensure they will have peace of mind when you're gone because you took the time to plan accordingly with life insurance coverage.
Rivermark Insurance Agency
Plan now for your family’s future and keep them financially secure when you’re not there to take care of them. Rivermark Insurance Agency can help provide the protection you deserve by comparing plans from multiple carriers.
All it takes is 15 minutes to make sure you are getting the best possible price and coverage for you and your family. Get your no obligation quote online or call us at 503.906.9777.Get a Quote
Business conducted with Rivermark Insurance Agency, LLC is separate and distinct from any business conducted with Rivermark Community Credit Union. If you are purchasing insurance for yourself or as part of a credit union loan, you need to be aware of some important information. Insurance products are not deposits of Rivermark and are not insured by the NCUA. They are not guaranteed by Rivermark and may be subject to risk. Any insurance required as a condition of an extension of credit by Rivermark may be purchased from an agent or an insurance company of the member’s choice. Rivermark Insurance Agency, LLC is a subsidiary of Rivermark.