How To Set Up Life Insurance And Choose The Right Option

Thinking about life insurance is one of those things that bring about a sense of morbid dread. After all, thinking about death – especially your own – isn’t easy but smart financial planning can help your family after you’re gone. While contemplating and accepting your mortality might require some deep introspection, there are certain aspects surrounding death that you should consider before it’s too late. If you have dependents, you need to think about how your death can impact them financially. That is where life insurance comes in. If you don’t know much about life insurance, let’s first start with the basics. It is essentially a contract between you and an insurance company that entitles your loved ones to be provided a sum of money after your death. Different life insurance plans also cover mortgages, college tuition, as well as living costs. 

Who Needs Life Insurance 

If you’re the primary provider for your family, having life insurance is something you must consider. You need a life insurance plan to provide your family some financial leverage that can help them meet living costs after your death. There are certain scenarios in which you might want to skip life insurance altogether. This could be valid if you never plan on having any children or dependents in your life, and this includes aging parents as well. You can also skip life insurance if you have a huge inheritance and savings, and don’t think you need to set aside money to cover your family’s expenses after your death. 

The above-mentioned scenarios are not that common and most people will need some form of life insurance to cover their family’s expenses. You might be childless right now, but you don’t know if you will have a family further down the line. So it’s better to stay on the safe side and try to secure your family’s financial future.

Types of Life Insurance 

There are numerous plans available, and this might make the decision of choosing a plan a bit complicated for you. However, understanding the types is not as difficult as it might appear. It’s important for you to note that there are a number of plans available but they all fall under 2 main sections: whole life insurance and term life insurance.

• Term Life Insurance: Term life insurance covers a specific number of years before expiring. The amount of money is paid to your beneficiary if you die within the specified time period. It is renewable at a higher cost if the specified time runs out and you don’t want to cancel your coverage. Term life insurance starts out at lower costs compared to whole life insurance and can be an excellent choice for those just starting their families. 

• Whole Life Insurance: This type of insurance doesn’t expire and provides coverage for your entire life. It works as an investment-line savings account and accrues interest at a fixed rate. Another advantage of whole life insurance is that you can withdraw the amount as a loan even during your life if you ever need it. Your designated beneficiary will be paid death benefits when you pass away, and other costs like burial and medical bills are also covered. It is a more traditional, permanent form of life insurance and you’ll have to pay premiums which usually remain constant throughout the duration of the contract. These insurance plans however are more expensive compared to term life insurance rates so they might not be affordable to everyone.

There are a number of insurance companies that offer life insurance plans but you need to carry out thorough research before you commit yourself to one. In this regard a Policy Advisor will help you choose the best insurance company that fits your needs. Don’t settle for a company that offers a lower initial rate as the ‘total’ price might turn out higher than you expected. 

When to Get Life Insurance 

Young people might consider putting off buying a life insurance plan because it might just not be a priority for them. However, the delay can prove to be expensive. The cost of insurance depends on your age, health, and gender, and the premiums that are locked in at that age tend to stay constant throughout the whole duration of the contract. Most insurance plans start out cheap for young healthy people. So securing a life insurance plan when you’re in your twenties can actually save you costs later in life. Moreover, if you’re working to pay off student debt, you wouldn’t have to worry about a loved one inheriting the debt once you’re gone. 

Getting life insurance is a wise decision that can help your family in case of your demise. Your family will have better financial coverage, and you wouldn’t have to worry about them making ends meet if you’re the major provider for your family. If you have a dependent spouse or children, it’s better to get life insurance sooner than later.