Life Insurance
You don't need life insurance... unless, of course, you're alive. Sounds kind of silly, doesn't it? Indeed. And so does living life without the peace of mind of knowing that your loved ones won't have to face loss of income, loss of home, or loss of savings when they're already facing the loss of their loved one... you. But, if you don't already have it, which type of life insurance is best for your situation? And how do you know how much life insurance to buy in the first place? Below is information from top life insurance companies in New Jersey on the various types of life insurance available today, as well as some tips on determining how much life insurance you need.
Whole life
Whole life insurance is traditional life insurance. This is the type that most people think of when they consider purchasing life insurance. Whole life insurance is just that... insurance purchased for your 'whole life.' It's a permanent insurance that can last the life of the insured regardless of when the policy is purchased. As long as premiums are paid in a timely manner, whole life insurance policies don't run out, which is a feature that differs from that of term life insurance. Whole life insurance plans provide level death benefits to the policy's beneficiary (or multiple beneficiaries) as long as the policy is in force. After the premiums are paid, the remaining portion is invested by the policy's insurance company, with the performance of the investment (typically at a guaranteed minimum return) being credited to the cash value of the policy's accompanying account.
Term life
Term life insurance differs greatly from whole life insurance. It's called 'term' life insurance because there is a set term or period of time that the policy is in force, typically from 5 to 20 years. During the life of the policy, the premiums typically are kept at a level cost, and when the life or term of the insurance policy ends, the insurance policy instantly cancels. Term life insurance typically costs less than whole life insurance, and the idea with term life is for policy holders to invest the savings in other revenue-building avenues.
Universal life
Life whole life insurance, universal life policies also are permanent policies. These policies, however, provide policy holders with a more flexible means of paying premiums as well as benefit amounts. Universal life insurance policies provide two options. The first option pays a level death benefit with the cash value account. This helps to keep premiums low. The second option pays out the funds in the account along with the death benefit, which makes for higher premiums but also a higher payout.
How much life insurance do you need?
In order to determine how much life insurance you need you have to figure out how much income your family will need to replace in the event of your passing. Following are some questions you need to answer before deciding upon which type of life insurance is right for you, as well as the amount of the policy itself:
1) What is the amount of time your family will need financial support? For instance, parents of young children will need financial support for a longer period of time than parents of older children, parents whose children are grown, and spouses who have no children.
2) How much income will need to be replaced? If your income is $40,000 per year, consider purchasing a policy that will replace that amount for at least 3 years.
3) What types of future expenses would you consider paying if you live to a ripe old age? For instance, if you had always considered that you'd pay for your kids' college tuition, chances are you wouldn't want that to change with your early passing.
4) Does anyone in your family have a chronic health problem or special needs? Or, do you or your spouse have parents whose future needs you both have considered assisting with, such as nursing home expenses?
5) Will your spouse need extra time to get back on his or her feet? Something many people don't consider when they purchase life insurance is the time it may take spouses to grieve and overcome their feelings of loss. Consider purchasing a little extra life insurance that would afford your spouse enough time to bounce back from losing you.
Before purchasing life insurance, it's vital that you consider circumstances that your family not only faces now, but could face in the future. One of the best ways to answer the question of how much life insurance you need is to think about all the things you want for your family if you live to see your children and grandchildren grow up.
No one relishes the idea of insuring their own life, but the risks involved in not having life insurance far outweigh facing the potential need for it. The time to determine your family's needs and the time to choose the right policy to fit those needs is now. Contact a life insurance company in your area for more information and assistance on choosing the right policy for the needs of you and your family.
Whole life
Whole life insurance is traditional life insurance. This is the type that most people think of when they consider purchasing life insurance. Whole life insurance is just that... insurance purchased for your 'whole life.' It's a permanent insurance that can last the life of the insured regardless of when the policy is purchased. As long as premiums are paid in a timely manner, whole life insurance policies don't run out, which is a feature that differs from that of term life insurance. Whole life insurance plans provide level death benefits to the policy's beneficiary (or multiple beneficiaries) as long as the policy is in force. After the premiums are paid, the remaining portion is invested by the policy's insurance company, with the performance of the investment (typically at a guaranteed minimum return) being credited to the cash value of the policy's accompanying account.
Term life
Term life insurance differs greatly from whole life insurance. It's called 'term' life insurance because there is a set term or period of time that the policy is in force, typically from 5 to 20 years. During the life of the policy, the premiums typically are kept at a level cost, and when the life or term of the insurance policy ends, the insurance policy instantly cancels. Term life insurance typically costs less than whole life insurance, and the idea with term life is for policy holders to invest the savings in other revenue-building avenues.
Universal life
Life whole life insurance, universal life policies also are permanent policies. These policies, however, provide policy holders with a more flexible means of paying premiums as well as benefit amounts. Universal life insurance policies provide two options. The first option pays a level death benefit with the cash value account. This helps to keep premiums low. The second option pays out the funds in the account along with the death benefit, which makes for higher premiums but also a higher payout.
How much life insurance do you need?
In order to determine how much life insurance you need you have to figure out how much income your family will need to replace in the event of your passing. Following are some questions you need to answer before deciding upon which type of life insurance is right for you, as well as the amount of the policy itself:
1) What is the amount of time your family will need financial support? For instance, parents of young children will need financial support for a longer period of time than parents of older children, parents whose children are grown, and spouses who have no children.
2) How much income will need to be replaced? If your income is $40,000 per year, consider purchasing a policy that will replace that amount for at least 3 years.
3) What types of future expenses would you consider paying if you live to a ripe old age? For instance, if you had always considered that you'd pay for your kids' college tuition, chances are you wouldn't want that to change with your early passing.
4) Does anyone in your family have a chronic health problem or special needs? Or, do you or your spouse have parents whose future needs you both have considered assisting with, such as nursing home expenses?
5) Will your spouse need extra time to get back on his or her feet? Something many people don't consider when they purchase life insurance is the time it may take spouses to grieve and overcome their feelings of loss. Consider purchasing a little extra life insurance that would afford your spouse enough time to bounce back from losing you.
Before purchasing life insurance, it's vital that you consider circumstances that your family not only faces now, but could face in the future. One of the best ways to answer the question of how much life insurance you need is to think about all the things you want for your family if you live to see your children and grandchildren grow up.
No one relishes the idea of insuring their own life, but the risks involved in not having life insurance far outweigh facing the potential need for it. The time to determine your family's needs and the time to choose the right policy to fit those needs is now. Contact a life insurance company in your area for more information and assistance on choosing the right policy for the needs of you and your family.