Life insurance and annuities are an important part of everyone’s financial plans. The coverage you buy today will protect the people you love long after you are gone. Depending on the coverage you choose, your life insurance policy could also protect you financially while you’re still alive and be a vital part of your retirement plan. The real challenge is knowing how much coverage you need and what type is the best for you and your family.
How much life insurance do you need?
It is tricky to know how much life insurance coverage you need, as the right amount of coverage changes as you go through life. Are you single or married? Do you have children or grown adults? Are you in the work force or retired? These are a few scenarios that could affect how much coverage you need.
When you’re ready to purchase a life insurance policy, consider how many dependents you have, what their future education expenses might be, how much outstanding debt you have, and your current lifestyle. In general, many people look to buy a policy that is worth five to ten times their annual salary. Check out this life insurance calculator to estimate the right coverage for you.
What is the right type of life insurance?
With so many life insurance options, how do you choose the policy that is right for you? Once you know the basics of life insurance, it’s time to choose the right plan. We’ve outlined some of the most common considerations people use when choosing a policy below:
Term life insurance is generally the most affordable life insurance option. As the name implies, the insurance is good for a specific amount of time (usually 10, 20, or 30 years). The term life policy does not gain cash value and cannot be used as an asset. Term life insurance is a great option if:
- You need a short-term solution and need insurance for a specific time. For example, if you have young children and want to ensure they will be able to afford their education if you pass away, a term policy might be the ideal solution for your family.
- You have a limited budget but need coverage. Term insurance is generally the most affordable form of life insurance, but still provides excellent coverage benefits if something happens during the policy term limit.
- You are looking to lock in your insurability while you are young. Many term policies include an option to convert to a permanent life policy without additional medical examinations when the coverage term nears its end.
Whole life insurance, also called permanent insurance, offers lifetime coverage that does not expire and builds cash value over time.
Universal life insurance is a form of permanent insurance but generally offers greater flexibility than whole life policies.
Permanent life insurance policies, such as whole life and universal life, are important to consider if:
- You need insurance for as long as you live. Because coverage remains steady over time, whole life policies allow the security of knowing you are covered.
- You are looking to invest in a product that grows and matures over time. Because you can build equity with permanent life policies, they can be considered an asset.
Long-term care insurance is another product offered under our life insurance portfolio. With this product, conserve your life savings and assets in case you require costly, long-term care.
Another product offered under our life insurance portfolio is disability income. Protect your greatest asset, your ability to earn a living. Disability insurance helps assure you and your family retain the resources needed to cover living expenses if you become disabled.
* *Long Term Care and Disability Income insurance policies are underwritten by a variety of insurance companies that are not affiliated with our company. See your Rural Mutual agent for more info about these products.
When to consider life insurance
Every situation is different but common triggers that prompt people to purchase life insurance include:
- Getting married or getting divorced
- Buying a home
- Having children
- Changing jobs or retiring
- Starting your own business
Generally, you should purchase life insurance if you have dependents, or are responsible for primary care of your loved ones. If your family depends on you and your income, you can protect your family’s future with life insurance that will provide financial security after you are gone.
You should also consider purchasing life insurance if you have outstanding debts (like a mortgage) that would go to a co-signer or spouse. If you own and operate a business, life insurance could provide an immediate cash payout, which would assist while transitioning business accounts. Many people also consider leaving a portion of their life insurance to a meaningful cause or charity.
Your life insurance should change as your needs do. Reach out to your local Rural Mutual Insurance agent to make sure you and your loved ones are protected against the unexpected today.
*Life insurance and annuity products offered through Farm Bureau Life Insurance Company. See your Rural Mutual agent for more information about these products.