September is Life Insurance Awareness Month
Life Happens is once again coordinating their annual Life Insurance Awareness Month campaign for the month of September. The theme this year is “Journey to Financial Fitness.” Having life insurance is an important part of being financially fit, because it insures your most important asset; you. If you have been waiting for the right time to start looking for a life insurance policy, now is the time to act.
It may seem difficult at first knowing where to start. With hundreds of different plans out there with different premiums and coverage, the process can seem confusing and overwhelming. Obtaining protection for your loved ones in the event of a worst-case scenario is a worthwhile investment of your time, however, and there are resources available that can help you sort through your options more quickly and efficiently.
Term Insurance vs. Permanent Life Insurance
Life insurance can be broken down into two general categories: term life insurance and permanent life insurance. As their names suggest, term insurance covers a specified term or length of time, while permanent life insurance covers you until your death, as long as you continue paying the premiums.
Term insurance can be simple, straightforward, and inexpensive compared to permanent insurance. Basically, you pay a fixed payment for a certain length of time for a set amount of coverage. The price of the policy varies depending on several factors such as your age, health, term of the policy, and death benefit.
Permanent life insurance has more complication to it, but the elements of the policy may be appealing for some people. In addition to providing a death benefit, permanent insurance policies build up cash value over time, providing policy owners with an asset that can be cashed in or borrowed against if needed. The downside to permanent insurance is the cost; permanent policies are typically far more expensive than term policies, and for many individuals, it does not fit into their budget.
How to Choose a Plan that is Right for You: The first step is to decide whether to go with term or permanent life insurance. The next step is determining what level of coverage you need. Life insurance should cover several potential expenses for the insured and their loved ones; including home mortgages, auto loans, unsecured debts, lost income until retirement age, college expenses, and of course, funeral costs. You may have some or all of these or other expenses you want to insure for. Which of these expenses you have will determine how much coverage you will need.
To help find the right insurer and the right policy as efficiently as possible, it is best to work with an independent insurance broker. Independent agents can help navigate different policies among the multiple carriers that they work with. And because they are not captive to any particular insurance company, they can provide objective information on each option to help you find the life insurance plan that best fits your specific needs.