{"id":12696,"date":"2024-08-23T13:43:05","date_gmt":"2024-08-23T20:43:05","guid":{"rendered":"https:\/\/www.soundcu.com\/?p=12696"},"modified":"2024-10-02T16:24:46","modified_gmt":"2024-10-02T23:24:46","slug":"how-much-insurance-you-really-need-to-protect-yourself-and-your-family","status":"publish","type":"post","link":"https:\/\/www.soundcu.com\/blog\/how-much-insurance-you-really-need-to-protect-yourself-and-your-family\/","title":{"rendered":"How Much Insurance You Really Need To Protect Yourself And Your Family"},"content":{"rendered":"
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How Much Insurance You Really Need To Protect Yourself And Your Family<\/h2>\n

Life teaches us that we can never be too prepared. We all need a protection plan in place, which includes a few essential elements: an emergency fund, health insurance, a basic estate plan and, for many of us, enough life insurance.<\/p>\n

Unfortunately, life insurance is something many people \u2013 especially women, who are chronically underinsured \u2013 avoid thinking about for as long as possible. Others don\u2019t prioritize it because they\u2019re not sure if<\/span> they need it. In reality, the question of whether or not you need life insurance is an easy one to answer. Ask yourself: would anyone suffer financially if you weren\u2019t around to provide for them? This could be a child, a dependent parent, a spouse or even a business partner.<\/p>\n

If your answer is yes, then it\u2019s time to consider buying some type of life insurance, which would provide your beneficiaries with funds (known as a \u201cdeath benefit\u201d) if you were to die. Your death benefit could help replace your income, cover funeral costs, pay off debt, or fund college for your kids among other things. Simply put: life insurance is a smart, often cost-efficient way to make sure others are taken care of if something were to happen to you. Here\u2019s a guide to help you figure out which type of insurance makes the most sense for your needs.<\/p>\n

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Term Life Insurance<\/h3>\n

Term life insurance provides a death benefit for a specific period of time called the term.\u00a0 When that period is over, the coverage terminates. <\/em>Term is a pure insurance policy with no investment component attached, which is why it\u2019s usually the most inexpensive form of life insurance. The cost varies based on the size of the death benefit, your health and your age. As you get older, the cost of a term policy goes up.\u00a0 That\u2019s one reason many people opt for \u201clevel term\u201d policies, which hold your premiums steady for up to 20 or 30 years. Another reason is that with these longer-term policies you don\u2019t have to go through an underwriting physical to qualify each time you renew.\u00a0 The other option would be \u201crenewable term\u201d policies, where your premiums can go up every year. But those can require new physicals, and if your health is declining, you could be looking at a much bigger bill.<\/p>\n

Term life insurance is the right insurance for most people because it\u2019s the best way to get the most amount of coverage for the least amount of money. For many people, it\u2019s the only way to afford the total coverage you ideally need. It also works well for anyone who needs coverage for a limited amount of time. For example, you might need coverage until your child graduates from college or until your mortgage is paid off. If you die during the term of your policy, your designated beneficiary will collect the death benefit. If not, your policy will end once the term is over. Note: It\u2019s always a good idea to make sure your term is \u201cconvertible\u201d to permanent insurance. It won\u2019t be free, but if you do need the coverage for a longer period of time, you know you\u2019ll be able to qualify for it even if your health has declined.<\/p>\n

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Employer-Sponsored Term Life Insurance<\/h3>\n

Many of us have some group term life insurance coverage available through our employers, and in many cases we might not even realize it. Check with your HR department to understand what\u2019s available to you. Buying a policy through your employer may offer a less expensive way to buy more, because group life insurance policies \u2014 like group health insurance policies \u2014 spread out the risk the insurer is taking over a larger group of people. The downside is that when you leave your job you\u2019ll lose the coverage unless you can arrange with your employer to continue it by paying out of pocket (not all employer policies are \u201cportable\u201d in this way, but some are, so ask.)<\/p>\n

Accidental death and dismemberment insurance (also known as AD&D) is another common form of employer-sponsored life insurance. And while this can be a great safety net to have, it won\u2019t pay out a death benefit if you pass away from illness or other non-accidental causes. If this is all your employer offers, shop for additional insurance on your own.<\/p>\n

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Permanent Life Insurance<\/strong><\/h3>\n

Permanent life insurance provides coverage for as long as you live providing the premiums are paid. Besides including a death benefit, permanent insurance has an investment component that enables you to accumulate cash value.<\/p>\n

How does that work? A portion of your premium goes toward building a cash account which can then grow tax-deferred from policy dividends, interest or investment earnings. And depending on the policy, you can borrow against it or withdraw cash value. But because it\u2019s doing double duty by providing an investment vehicle and a death benefit, permanent insurance typically costs more than term. Also, any loans or withdrawals that aren\u2019t paid back into the policy can reduce the death benefit, possibly leaving your loved ones with less.<\/p>\n

Ultimately, to determine if permanent life insurance is right for you, you\u2019ll need to ask yourself a couple of questions. First, what can you afford? If buying term is the only way to get enough insurance to provide for the needs of your dependents, then term is the way to go \u2014 or at least the way to start. Again, you can often add some permanent insurance down the road by converting term life into permanent.<\/p>\n

Second, do you see yourself needing life insurance when you are 70, 80 or older? If your kids are self-sufficient and your spouse will be fine living on a combination of savings, investments and Social Security, then you may not need permanent insurance. But if you have a special needs child who will require your support well into adulthood, at least some permanent insurance is often a smart move. It can also be worth considering if you want to have enough insurance to cover estate taxes when you die.<\/p>\n

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Which Type of Permanent Life Insurance is Right For You?<\/h3>\n

\u00a0<\/strong>There are three major types: whole, variable and universal. Here\u2019s a rundown on each.<\/p>\n