Life insurance is far more than just a decision of how much to buy. Depending on your financial situation, life insurance can be used for a variety of purposes, such as:
What’s your life worth? Though your financial circumstances may look the same as your co-worker’s in the office next to you, your needs are different, since every person’s situation is unique. Working out how much life insurance you need shouldn’t be a guessing game. One of the best ways to figure out how much coverage you should take is to use the online calculators provided by most of the major insurance companies.
One common benchmark is your death benefit should be about 10 to 15 times your annual earnings, but there are a variety of factors to consider:
- Other income sources.
- The size of your family.
- Whether your spouse works and his or her earning capacity now and in the future.
- The number of people who are financially dependent on you and for how long.
- The death benefits your family will receive from Social Security and any life insurance plan at your work.
- Any special needs such as mortgages, college education funds and estate planning.
The Benefits of Term Life Insurance
A lot of people do not realize that a substitute to expensive permanent life insurance policies even exists. With term life insurance, you decide the coverage amount and length of the policy, as opposed to whole or permanent life insurance, which combines an investment product with life insurance. Some of the advantages to buying term life insurance are:
- Owing mainly to its investment feature, whole life insurance is costly, while term life insurance is very reasonably priced.
- Term life insurance is easy to understand, and allows for personal choice.
- Rather than have an insurance company invest your hard-earned money, you can do it yourself.
- Term life insurance is good for short-term needs.
When To Buy
When to purchase life insurance depends more on your individual situation and your personality than on any rigid rules. The premiums on life insurance increase significantly as you get older. Buying life insurance while you are younger can be particularly important if you are in a high-risk group for any illness or medical condition that might make you uninsurable.
Men usually pay more for life insurance because the mortality rate, or probability of death, is higher for men than for women. A study published in February 2001 by the Society of Actuaries titled Why Men Die Younger concludes that the hormone testosterone “plays havoc biologically and behaviorally with men’s bodies,” leading to diseases and risk-taking behavior that are more common among men than women.
Here’s Hoping You Never Have to Collect
Hey, at Great Guy Life we want you to live a long, healthy, fun and prosperous life. Life insurance isn’t really for you; it’s for those you leave behind. Live hard, live well and give some serious thought to those you love and who are counting on you.