Why do I need life insurance?
There’s no replacement for you and the contribution you make to your family. You want to make sure that people in your life, especially your dependents, can remain financially secure after you die.
That’s what life insurance does for you and your loved ones. It gives you peace of mind. Income replacement is the #1 reason why people buy life insurance.
Stay-at-home moms or dads also have an important, often overlooked, economic value that should be covered by life insurance.
Life insurance is also used to achieve specific business or estate planning goals.
Bottom line: life insurance financially protects your family and loved ones at a time when it is needed the most.
The Whitcomb Agency recommends that each family income provider carry no less than ten times their annual income/worth in life insurance.
The amount of your outstanding mortgage should also be a consideration. Any coverage for your mortgage should be in addition to the amount of insurance you calculate for your income coverage.
It’s quite common to see life insurance also referred to as mortgage protection insurance since most people equate buying life insurance with the need to pay off large debts.
Who should I buy life insurance from?
You take the time to purchase a life insurance policy, so you want to feel confident that the company will be around in 20 or 30 years to handle your family’s needs if the time arises.
That’s why the most important buyer’s tip is to buy from a financially sound life insurance company. Though competitive pricing is important, it’s more important that the company is stable, financially strong and able to fulfill the policy should you need it.
You should pay particular attention, at time of purchase and throughout the life of the policy, to the financial stability ratings of your life insurance company. The Whitcomb Agency recommends that you buy only from A (“Excellent”) rated companies or higher by A.M.Best Company.
What are the advantages of term life insurance?
The easiest life insurance to understand (and the lowest cost to buy) is term life insurance.
Term life insurance provides straightforward death benefit protection without any expensive “cash value” or investment component add-ons.
Your term life insurance policy will offer level premiums for your choice of 10, 15, 25 or 30 years during which the premiums are guaranteed not to increase. As long as you pay your premiums on time, the company cannot cancel you. If the insured dies during the term, the death benefits are paid to the beneficiary without any complicated process or rules.
It doesn’t get any easier than a term life insurance policy, plus it’s the most affordable type of life insurance.
What should I look for in a term life policy?
Most high quality term life policies sold today are guaranteed renewable, which gives you the right to continue your coverage beyond the initial rate guarantee period without a medical exam.
This feature can become extremely important to your family should you become sick and uninsurable towards the end of your initial term life rate guarantee period. Also be on the lookout for living benefits which many insurance companies now include at no additional cost. Click here to learn more about living benefits.
How often should I review my life insurance needs?
Your life changes constantly, right? From purchasing a new home to getting married or having children to starting a business or even retiring, your life and your financial situation are constantly in flux.
Because the financial needs of your loved ones change over time, you should take a look at your life insurance policy periodically.
The Whitcomb Agency suggests you review your life insurance coverage at least once every five years or when you experience a major life event such as change of income or assets, marriage, divorce, retirement, the birth or adoption of a child, or purchase of a major item such as a house or business.
Who can I name as beneficiaries?
In naming your beneficiaries, keep in mind that life insurance companies only allow the names of those who are actually financially dependent upon you in some way.
Adults or children that you support, or owe money to, are considered to have a financial interest in you.
An acquaintance, roommate, friend or relative, absent of a financial relationship, will not do. You can name a charity if you have a history of giving to that charity.