Acquiring life insurance is one of the most important financial decisions you can make. Not only does it protect your loved ones you will leave behind, but it can be a helpful tool way before then. Be sure to hire a financial advisor so that you can incorporate your life insurance policies in a larger financial plan.
Tips for Acquiring the Right Amount of Life Insurance
Here's what you should consider when purchasing life insurance:
1. Decide On Your Coverage
Life insurance is devised to either last for a certain period of time (also called 'term life') or a lifetime. If you're only looking for insurance for a specific period, for instance, while your children are growing up or for the length of a mortgage, then consider the term life option. However, if you're looking for life insurance for as long as you live, consider a permanent coverage option.
2. Determine How Much Life Insurance You Need
You’ll likely want to talk to a financial professional (like one of our trusted advisors) to determine how much life insurance you need and what variety of policies might be the best for your situation. When estimating your coverage, include your debt, income replacement, burial wishes/costs, and if you have dependents who would need funds for educational expenses.
3. Think About Your Other Objectives
Did you know that some permanent life insurance policies can be used as savings? They are lifelong and have a cash value that's meant to increase over time. These permanent life policies contain a death benefit (an amount paid at the time of death) and a cash value that grows over time on a tax-deferred basis, similar to tuition or retirement savings plans.
4. Talk With a Trusted Financial Advisor
When you decide to acquire life insurance, you should have someone with your best interests in mind who can guide you through this process. Make sure to understand the finer points of your life insurance policy, especially exclusions (events not covered by your life insurance policy). Know them and everything else before you purchase the insurance policy rather than leaving everything to chance.
We would love to help you create a life you love. Part of having that peace of mind is purchasing life insurance that will take care of your loved ones in the case of an unexpected tragedy. For more information on life insurance and the bigger picture of your financial future, sign up for our free Financial Foundations course. You’ll learn the basics on topics like life insurance, tax reduction, retirement planning, and more. We look forward to seeing you at our next course!