Buying life insurance is not a topic most people enjoy. It’s hard to think about your life ending, especially if you have kids, a spouse, or other loved ones in your life. Because of this, many people wait too long to consider buying life insurance. Being older, ill, or having significant debt can raise your premiums or make you ineligible for a policy. Even though you may not think you need a life insurance policy yet, it’s a good idea to speak to an advisor about your options. When discussing life insurance with someone at CauseWell Insurance Services, you can be assured you’re talking to a considerate and compassionate agent who will help you find the right insurance policy.
We work with several life insurance carriers. Here is some information on one of our carriers: National Life Group.
There are several reasons people consider purchasing life insurance, including:
- Paying for burial costs
- Paying for any debts, such as a mortgage or business debts
- Caring for dependents until they come of age or helping to pay for higher education
How much insurance should you buy? This answer depends on the specifics of your situation. As an independent local insurance agency with an experienced team, we will help to find the right amount for your personal situation. Contact us today to learn more about what life insurance policies might be right for you.
If you are a do-it-yourself type, you can buy life insurance online here.
If you are interested in life insurance in general, please keep reading below.
Types of Life Insurance
Life insurance comes in several flavors, but we like to keep things simple. Life insurance is essential when someone you care about depends on you and would face hardship if you were not there; if you could not be there to provide for them. There are also business applications such as in partnerships where cash would be needed if one of the partners passes away. Life insurance can seem complicated, but, in a nutshell, they all fall under one of these various types:
– Term Life – You pay a certain amount each month, quarter, or year for a specific term, and your beneficiary will receive a certain amount upon death. Term insurance can last for one year at a time, or 10, 20, or even 30 years, with a level premium that won’t increase. Then after the term you have chosen is reached and if you are still alive, the premium will increase quite rapidly.
– Whole Life – You pay a larger certain amount each month, quarter, or year for a certain term, and the policy builds cash value that can be borrowed while you’re alive within certain limitations, and when you pass away, your beneficiary(ies) will receive the death benefit. If you borrowed your cash value, it might be deducted from the death benefit.
– Universal Whole Life – You pay an even larger amount, and you get more flexibility in how and when you pay it. In some cases, you even get to choose if you pay the premium at all (since your policy has some cash value and gives you that flexibility). The idea is that the larger cash values may pay the insurance for you after many years, and you can take a break. But you have to be careful and monitor it because it’s possible that your cash values can be depleted and that your policy can be canceled due to non-payment.
– Variable Whole Life – Variable policies are similar to other whole life policies except for one big difference – you get to choose investments like mutual funds instead of the insurance company doing that for you. An Agent selling variable insurance products must have a securities license. These types are for people who are comfortable making financial and investment decisions on their own. You need to understand what you’re doing if this is something in which you are interested.
We believe that Term or Whole Life policies are sufficient for most people. You can buy insurance for a thousand reasons, including accidental death, credit card insurance, mortgage insurance (which some loans require), and many more. But the bottom line is that these are all meant to do the same thing, pay a settlement to a beneficiary upon your death. We don’t see much reason to bother with the why or how of your death. You want your family or your beneficiary, whoever it is, to have the right amount of cash to do what needs doing if you are no longer in the picture. Term and whole life policies do just that and with less complication.
Note: Currently, CauseWell Insurance Services does not offer Variable Life Insurance.
How Much Life Insurance Should You Have in Place?
Just think about what you would want for your beneficiaries if you pass away. Would you like your wife or kids (or your parents) to be able to pay off your mortgage? How much money would you want them to have each month as income? How old are they? How many years would it take them to get on their feet without you? Will your kids need money for school or college regardless of whether you are there? At the very least, will your family have enough money to pay for a funeral and burial plot when you are gone? There are very simple, easy to get policies designed just to pay for final expenses today, and they’re not as expensive as one might think.
You’ll also have to balance these needs against your assets. You might just have enough cash lying around in the bank to cover all of these needs. If so, then it could be said that you are self-insured.
Some people have great wealth, but the money is tied up in non-liquid assets, such as the home in which you live. This is a prevalent scenario where you have a large amount of equity in your home but don’t want to force your family to sell it to have enough money to live after you’re gone. That’s not a desirable situation to leave your family in. So, life insurance can help solve many of these problems.
The process should be to take an inventory of your liquid assets (cash, stocks, anything that can be sold or turned into cash with ease), your non-liquid assets (things like your home, cars, valuable property, or business), then decide how much money will be needed to help your beneficiaries get on with life without the financial worries that would occur when you are gone. Many experts suggest having life insurance in the amount of 8 to 10 times your annual income. At a reasonable rate of return, something like 7% per year, this could give your family almost as much income as you earn each year for possibly the rest of their lives. Others suggest just enough to help them pay off the most significant bills you have. This would be for someone whose beneficiary is relatively self-sufficient or capable of self-sufficiency within a reasonable time.
Don’t make the mistake of procrastinating on life insurance, especially if you have a family or young children who depend on you. Think of life insurance as something you buy for your family, not for yourself. It is a virtuous gift to protect them in the worst possible time of their lives. People don’t realize it, but life insurance is a gift of love. It’s not as expensive as many think, and it shouldn’t be put off.