This question has no universally correct answer because it depends on your own situation. A life insurance policy can provide peace of mind to your loved ones in the event of your untimely passing and provide for their financial needs. You may have mortgage or tuition payments, child care costs, and other financial obligations that your loved ones would struggle to meet without your income. If something were to happen to you, a life insurance policy could help your loved ones retain their current standard of living.
The money you build up with permanent life insurance can be invested tax-deferred until you reach a reduced tax bracket, which is likely to be when you reach retirement age. Life insurance is a good addition to any financial portfolio, but it shouldn’t make up the bulk of it. Instead of buying life insurance to get a tax break, you should buy it so your loved ones will be taken care of financially.
Since this is a major decision to make for yourself and your loved ones, let’s go over some aspects of life insurance that will help you make the right decision:
Offer your loved ones security
The biggest reason to get life insurance is to ensure that your partner, kids, or even close friends can continue to live comfortably in the event of your untimely demise. Though the death benefit isn’t meant to leave your loved ones with a fortune, it can help ensure that bills like housing and food are taken care of. Whole life insurance, for instance, can help your loved ones with the following:
- Financing a mortgage
- Paying for necessities like healthcare, child care, and other services
- Taking care of higher education costs
- Resolving family debt problems
- Running a family enterprise
Tax breaks and savings
Permanent life insurance often has higher rates than term insurance, but this is because a percentage of each premium is put into a savings account for the policyholder. If you keep up with your payments, your insurance will stay in effect, and your savings will grow as interest is credited to your account at regular intervals. Interest rates will be low, so don’t expect to earn as much as you would in the stock market. You can think of this as a risk-free option for financial savings.
Add-ons to build on your plan
A whole life insurance plan can be customized in many ways to match your specific requirements. Riders allow you to buy more coverage without undergoing medical underwriting, have your premiums waived should you become disabled, use a portion of your cash value to offset the costs of chronic conditions, and add protection for your children—all at an extra cost. You should consult your broker to determine which, if any, of these add-ons make the most sense for your situation.
How much life insurance do I need?
So, now you know why life insurance is a smart idea, but how do you decide the coverage you need? Here are some factors to consider before purchasing life insurance:
- Think about what you want to accomplish, how much insurance you’ll need in the long run, and how much you can afford.
- Find out what kinds of coverage can best address your concerns.
- Select an insurance policy (or a mix of policies) that works best for you by weighing the policy’s upfront premium rate, potential premium rises over time, additional death benefits, and living benefits that can be used before death.
Should I consider final expense insurance?
Burial or funeral insurance, often known as final expense insurance, is a permanent form of coverage that provides a fixed death payout and uniform rates. The death benefit is modest since it’s meant to cover funeral and burial costs rather than providing major financial support for heirs.
Consulting with a life insurance agent is a huge help in making sure you make the most of whatever life insurance policy you choose. A financial advisor or independent life insurance agency can walk you through the ins and outs of various policies, assist you in determining your coverage needs, and suggest strategies that will work best for you.
Talk to the knowledgeable insurance professionals at Franklin Life and Annuity about your requirements, and we will find a life insurance policy that meets your requirements while still fitting comfortably inside your budget. We partner with only the most reliable Houston, TX life insurance providers to give you what you’re looking for: low rates and complete protection.
We also offer final expense insurance and funeral insurance for seniors. Get in touch with us right away to schedule a consultation with one of our experts.