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Why do I need life insurance?


 

Ask yourself: "Are there individuals relying on my income to uphold their current lifestyle?" In essence, if you were to pass away, would your surviving loved ones face challenges affording your funeral expenses, rent or mortgage payments, and other financial obligations? What about any outstanding medical bills? Could they manage these expenses while sustaining their usual way of life? If the response to any of these questions is "No," it's advisable to explore suitable life insurance choices that align with your requirements. 

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What is term life insurance?

Term insurance generally offers lower premiums compared to permanent policies. However, it doesn't accrue a cash value that can be accessed in the future. As the name suggests, term life insurance provides coverage for a specific duration, which could be one or more years. Should you pass away within the specified term, the policy pays out death benefits. Most term insurance policies can be renewed for additional terms, even if your health condition has changed, though the premiums might be higher. It's essential to inquire with your insurance agent or company about the renewal option before the term ends and whether there's a maximum age for renewals. Additionally, you might consider combining cash value life insurance with term insurance during the period when you have the greatest need for income replacement and protection.

What is permanent life insurance?

 

Permanent life insurance policies remain active as long as premiums are paid. They also come with a cash value that grows over time, enabling policyholders to borrow against it. Due to this savings aspect, the premiums for permanent insurance are generally higher compared to term insurance premiums. This type of insurance is preferred by individuals seeking lifelong coverage and potential cash value accumulation. There are multiple types of permanent life insurance, click here to hear more on life insurance from one of our carriers.

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How much life insurance do I need?

To determine how much life insurance you need:

  1. Calculate immediate expenses like funeral costs and debts.

  2. Estimate income replacement for your family.

  3. Consider long-term expenses like mortgages and education.

  4. Subtract savings and assets.

  5. Account for future goals and inflation.

  6. Include debts, healthcare costs, and liabilities.

  7. Adjust for spouse's income and your health.

  8. Consult professionals for guidance.

Adequate coverage ensures your family's financial security in your absence and should be reviewed as your life circumstances change.

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