Wondering about life insurance? Life Insurance is a contract that pays a lump sum in the event of death, and it provides financial security for loved ones. Let’s discuss what you need to know before buying this important coverage!
What is life insurance designed for?
Life insurance is designed to protect both temporary and permanent needs. Fully understanding the concepts of both types is essential to avoid getting the wrong coverage or overpaying for something you don’t need.
The first type- Permanent Insurance -is set up by an individual who has a long term goal in mind like retirement funding or paying off mortgages.
The second kind of coverage – Term Insurance is for short term needs such financial protection during a crucial transitional period in life, paying tuition expenses, or providing benefits to anyone who remains financially dependent on you.
How to avoid getting stuck with a plan that is too expensive and doesn’t meet your needs?
It is not easy to know the right questions to ask yourself before you speak to any company, but it’s imperative for finding an affordable policy. The following are three essential points when drafting your own coverage:
- What happens if something were ever going happen?
- How much does each need cost (i.e., health care vs income replacement)?
- And how long will they last in total?
Below is an example of a basic plan –
$80,000 – pays funeral expenses of $30K and leaves spouse with enough money to replace $50k from lost pension income for one year if the breadwinner dies prematurely.
$500,000 30yr term insurance policy – pay off’s a 30 year, $200k mortgage, and leave $300k to cover the lost income of $60k for five years if an unexpected passing happens.
There are certainly more complex policies out there. If you want to dive deeper click here for a free buyer guide!
Do I need to talk to a professional?
Absolutely. Getting a policy is one of the best ways to protect you and your family. Still, it’s also one of the most confusing topics out there. This is why factors such as universal, indexed, and variable policy options are pitfalls waiting for those who don’t know what they’re doing.
At SG Wealth, we can create a plan for you to ensure your policy will cover only what’s needed. The best part is all of our agents are not paid on commission! That means you can focus on what really matters- the customer experience.
Do you have any questions? We want to hear them! Use the button below so we can schedule a digital or phone meeting with your team.