Everyone needs life insurance to make sure their final expenses are taken care of and to leave a little something for their loved ones. In many cases, people put this expense off until later in life, but it can be beneficial to invest in a life insurance policy earlier. By starting your policy at a younger age, you can ensure your family is covered if something does happen to you.
Know That There Are Two Main Types of Life Insurance
Not all life insurance is the same, so it’s important to understand the difference between whole and term insurance. In a whole life insurance policy, you will continue paying until your death and, upon your death, the policy will pay out to your beneficiaries. Conversely, term life insurance has a time limit and you only pay into the policy for that established time frame. When the period expires, the policy expires, and no death benefit is to be paid out.
How Much Coverage Should You Buy?
Most life insurance Bridgeport WV experts recommend a policy that provides a death benefit that’s equivalent to eight times your yearly salary. This can seem like excessive, but it depends on the needs of your family and your expenses. You will also want to consider how much of your estate will go to paying off your debts at the time of probate. If you expect your estate to be primarily used to pay off taxes and debts, a larger life insurance policy can ensure your family will have what they need.
Don’t Name a Child Beneficiary
Certainly, if you die while your child is still a minor, you want to make sure he or she is looked after throughout their childhood. However, if you name the minor child as a beneficiary, the insurance company will hold onto the money, until the child turns 18. Instead, set up a life insurance trust, so the child can begin receiving payments at any time. Additionally, the trust will outline acceptable uses for the money, so a teenager can’t spend the money on drugs, alcohol, or other frivolous expenses.
Look for a Policy That Provides Life Benefits
Life benefits are fairly new in life insurance policies and they were introduced to help people pay for unexpected events, such as extreme illness. If you develop a form of cancer, for instance, you may need supplemental resources in addition to your health insurance coverage to help you pay medical bills. The life benefits of your life insurance policy will let you use the death benefits, while you’re still living. Most companies consider these extras or riders, so be sure to ask about the possibility of adding life benefits to the policy.
Life insurance provides financial support to family members after you pass away, but it can also be used in other ways. It can be an investment and a source of assistance in dark financial times, which makes it that much more important to begin a policy as soon as policy. Paying for a policy sooner will help you build its value, which may help you later in your life.