What is Life Insurance?
Everybody has a different understanding of life insurance. Some see it as a method to pay for a funeral. Other see it as income replacement. The truth is, life insurance does so much more than we think.
In short, life insurance is a product that pays a lump sum to beneficiaries upon your passing.
What Does Life Insurance Do For Families?
You’ve probably been approached many times about the idea of getting more life insurance. It’s not without good reason. Life insurance continues to do wonderful things for families. The harsh reality is that you likely don’t have nearly enough to provide for your family if something did happen.
Ask yourself important questions:
- How will my family pay for the funeral services?
- What are they going to do without my income?
- Are they going to be able to keep making the house payment?
- What will they have to sell to get by?
- Will they have to move in with relatives?
- Will my spouse be forced to remarry?
- Can my spouse save for my child’s education?
- Will childcare expenses go up due to my absence?
How Much Life Insurance Do I Need?
The best way to find out how much life insurance you need is to conduct a life needs analysis with an insurance professional. There are some online calculators you can use that will give you a general idea. Life Income Family Planning is working on designing our own online calculator. For now you can use the Nerd Wallet life calculator.
Some things to consider when calculating:
- How long can your family survive without your income?
- Are any of your loans forgiven at death?
- What kind of funeral do you want?
- If you rent, do you want your loved ones to be able to buy a house? Do you want them to live rent free for awhile?
What Are the Different Life Insurance Types?
Once you figure out how much life insurance you need, you should determine which life insurance option is the best for you. Your budget will play a role in this. Here are the basics:
Term Life is the simplest option when you have a low budget but a large need. It starts out more affordable because it’s temporary. Terms usually range from 10 years to 30 years. Normally, your rate is locked in when you purchase the policy. But when your term renews, the price increases significantly. People who buy term usually purchase a a policy with a high face value when their needs are the highest; then when their needs decrease (home paid off, kids moved out, etc.) they choose to convert a small portion of their term coverage into a permanent policy in order to pay for funeral expenses. In theory, final expenses are the only costs remaining at age 60 and up. Learn More.
Whole Life guarantees that a death benefit will get paid to beneficiaries. Because this option provides permanent life insurance, it usually costs more for coverage. There are many uses for whole life coverage. Most often, it’s used to pay final expenses. It is also commonly used for wealth transfers, leaving a legacy, and guaranteeing insurability for a child. Additionally, whole life insurance builds cash value that can be borrowed against while term insurance does not build cash value. Learn More.
Universal Life is a mixture of term and permanent coverage that offers more flexibility and potentially a better opportunity for cash value accumulation. Universal life is designed so that if an insured needs to temporarily pay less premium, they can do so without fear of the policy lapsing. It also allows an insured to dump in a sum of money in order to build cash value if they so choose. Learn More.
Is Life Insurance Really Affordable?
Yes. Life insurance is very affordable and just as important as car & home insurance, if not more. While you do have to be in pretty good shape to get the most favorable rates, you do not need to be a track runner. Many carriers even allow you to choose not to get a physical if the coverage is below certain dollar amounts.
You do unlock more features and get a better value if you increase your life insurance budget, but you can still walk away with a solid plan for less than a $1 a day.
Why choose Twin Cities Mutual Life Agency?
- There isn’t a one size fits all model that suits most people and most families. We believe in taking the time to help you correctly identify where coverage makes sense.
- We take an educational approach. We don’t believe in scare tactics. Life insurance is important, but it isn’t an agent’s right to guilting people into making a decision.
- We take your budget seriously. Believe it or not, but there are options that fit almost any budget. Additionally, we have access to many carriers. Not one single carrier can be the most competitive all the time.
To make an appointment, please visit our scheduling page.