Sure, insurance is a burden-until we need it. All the depressing issues aside, insurance is an essential and vital financial planning tool that everyone should take advantage of. A certified financial planner can help you to evaluate your insurance needs and will recommend policies that suit your lifestyle. When considering any kind of insurance, from term life to mortgage life insurance, several issues need to be addressedDo I even need life insurance?
If you have no dependents or loved ones that will be affected by the loss of your income, you may not need life coverage. However, if there are people that depend on you, life insurance is not something you should consider optional. Most people won't really perceive the value of life insurance until they have children. I remember when this first occurred to me. I had always wanted to go skydiving and finally I had my opportunity in all of the excitement, it hit me. What if I don't come home from this trip? My newlywed wife is 7 months pregnant, we are barely making the bills month-to-month as it is and I know there is no way she can do it alone. Needless to say, I cancelled my trip for the greater good of my new family, but I also took a long hard look at my insurance situation.
How much life insurance do I need?
If you are still reading at this point then you have probably recognized how much your loved ones depend on you for financial support. In order to keep supporting them as well as you currently are, even after you pass away, you should choose a life insurance policy that covers at least the full amount of your income for as long as you expect to be working. It is also important to include any substantial debts that will need to be taken care of. For example, let's say you owe 10,000.00 on a car, 70,000.00 on a mortgage, you make 40,000.00 per year, and are 30 years old, planning to retire at age 59. You should select enough insurance coverage to pay off your 70,000.00 in major debt, as well as 29 years worth of your annual income.
What type of life insurance policy is best for me?
All of the various types of life policies have their benefits and drawbacks, however, as a general rule you cannot go wrong with term life. If you purchase term life coverage early, it can be very affordable. Unfortunately, the longer you wait to get a term life policy, especially if you wait until you have developed significant health problems-which tend to occur in old age, the cost can become overwhelming. If you are starting out late in life, it may be a benefit to get a variety of policies. For example, you may want a personally owned mortgage life insurance policy to cover the outstanding balance of your mortgage, along with a modest sum of term life to aid your family with their other financial needs.
