Owning life insurance can be a good way to protect your family. It allows you to provide for your dependents after your death, just like you do during life. If you need help choosing the right life insurance product for you, then an insurance advisor can give you the information and guidance that you need.
Life Insurance FAQs
How Much Life Insurance Do You Need?
How much life insurance you need depends on your personal circumstances. Consider the following factors when deciding how much life insurance to purchase:
- Household income sources other than your salary
- How many people are financially dependent on you
- The earning capacities of the people dependent on you
- Financial commitments, such as mortgages
- Death benefits from Social Security or life insurance plans sponsored by your employer
What Type of Life Insurance Do You Need?
There are two main types of life insurance: cash value life insurance and term life insurance.
Cash value policies are designed to be held for the whole of your life and pay out a cash sum to relatives upon your death. You can also convert the policy’s cash value into an annuity or use it as a source of cash in an emergency.
Term life insurance provides coverage for a fixed period of time. At the end of this time period, you will have to reapply for a new term of coverage, which could mean undergoing another qualifying medical exam. However, term life insurance can be more affordable than cash value life insurance, at least in the short term.
Some specialist types of life insurance, such as mortgage protection term insurance, can provide coverage in specific situations. An insurance advisor can explain these products in detail and let you know which is right for your situation.
Personal Life Insurance
If you are an individual looking to purchase life insurance for yourself, then you may be confused by the range of options that are available. Buying life insurance can be an emotional process, as it forces you to address difficult questions, such as who will provide for your spouse and children after your death. Therefore, it’s important to seek professional advice to help you make the right choice.
Life Insurance as an Employee Benefit
Life insurance can be an attractive employee benefit. Make sure that your investment provides the maximum possible benefit for your employees by seeking professional advice to help you select the best policies.
HWP Insurance has over 100 years of experience of helping people to find the right life insurance product. Get in touch today to find out more about life insurance and how it can help to protect your family or employees.
Life Insurance F.A.Q.
Important factors include:
- Income sources (and amounts) other than salary/earnings
- Whether or not the individual is married and, if so, what is the spouse’s earning capacity
- The number of individuals who are financially dependent on the insured
- The amount of death benefits payable from Social Security and from an employer sponsored life insurance plan
- Whether any special life insurance needs exist (e.g., mortgage repayment, education fund, estate planning need), etc.
It is recommended that a person’s insurance advisor be contacted for a precise calculation of how much life insurance is needed.
It must first be recognized that in any life insurance purchasing decision, there are at least two basic questions that must be answered:
- “How much life insurance should I buy?” and
- “What type of life insurance policy should I buy?”
The question contained in (1) involves an “insurance” decision and the question contained in (2) requires a “financial” decision.
The “insurance” question should always be resolved first. For example, the amount of life insurance that you need may be so large that the only way in which this needed amount of insurance can be afforded is through the purchase of term insurance with its lower premium.
If your ability (and willingness) to pay life insurance premiums is such that you can afford the desired amount of life insurance under either type of policy, it is then appropriate to consider the “financial” decision–which type of policy to buy. Important factors affecting the “financial” decision include your income tax bracket, whether the need for life insurance is short-term or long-term (e.g., 20 years or longer), and the rate of return on alternative investments possessing similar risk.
Can an existing life insurance policy be used to provide for the repayment of an outstanding mortgage loan?
Credit life insurance is frequently recommended in conjunction with the taking out of an installment loan when purchasing expensive appliances or a new car, or for debt consolidation. Is credit life insurance a good buy?
Credit life insurance is frequently more expensive than traditional term life insurance. Further, if you already own a sufficient amount of life insurance to cover your financial needs, including debt repayment, the purchase of credit life insurance is normally not advisable due to its relatively high cost.