Family Affair: What to Know About Buying Insurance for the First Time
Monday, October 19, 2015, 6:00 AM | Leave Comment
According to US News & World Report, the percentage of Americans with life insurance has dipped from 78 percent to 70 percent and of those who are insured, many households do not have the adequate insurance. This leaves families in a precarious financial situation should the unthinkable happen.
Understanding life insurance will help you to make the right decisions for yourself and your family.
Make sure you are well informed when getting insurance for the first time.
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Varieties of Life Insurance
There are two primary types of life insurance: term and whole-life.
Term life insurance is sold for a set period of years, during which you pay your premiums monthly or yearly and your beneficiary is paid in the event or your death.
Whole-life policies work the same way, but the policy runs in perpetuity.
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Determining Your Policy Type Needs
Deciding which type is best for you and your family largely depends on your needs and what you expect from the future.
If you only require life insurance to cover you until your children have grown up and left the nest, term may be the right choice. This is especially true if you expect to save a large retirement nest egg over the years that can serve as your partner’s nest egg should you pass away unexpectedly.
If you have a lower-paying career, expect to care for your parents in their old age, or have many dependents, you may want consider a whole-life policy.
Those with disabled dependents or those who carry large debts may also want whole-life.
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Considering the Amount Needed
Leaving your loved ones with adequate funds to continue their lifestyle is the ultimate goal of life insurance.
To determine how large of a policy you need, don’t forget to consider the following circumstances:
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The amount of debt you carry. If your partner cannot afford the family home, it can place a strain on them or create the need to sell it.
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Ongoing, large expenses. If you believe all three of your children will qualify for Ivy League educations, or they will pursue graduate degrees, your insurance needs may be higher than those without this ongoing expense.
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Your partner’s needs. Should your partner ever decide to stay in a retirement home like Sunshine Retirement Living, you have to think about how to save up. The same can also be said if he or she ever needs nursing care.
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Buying life insurance for the first time can be tricky. By carefully considering your current and future needs, you can make the best decision for the financial stability of your family should the unthinkable happen.
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