I’m Starting a Family: Should I Purchase Life Insurance? – Guest Post
Just about every financial planner out there will answer this question with a resounding YES! If there’s ever a “right time” to purchase life insurance, it’s when you start a family. Unfortunately, not every family views life insurance as a necessary purchase and puts it on the back-burner.
Following a survey conducted in 2012, the insurance industry’s research outfit, LIMRA, determined that only 36% of families residing within the United States were covered by life insurance. In 2010, this figure was 26% higher, and one can only assume that the economy played a huge role in its decline.
While financial hardship is more than understandable, especially when a new family stacks up even more responsibility, that’s still 64% of U.S. families left struggling if something should happen to their primary income provider.
What’s the purpose of life insurance? To supplement income lost, cover debts and funeral costs, and provide future financial stability for your loved ones, in the event of a tragedy.
Things to Consider When Purchasing Life Insurance
There are different life insurance options available and, as always, you should consult with your financial planner to determine exactly which route you should take, but here are the broad strokes:
• Decide Whether to Buy WHOLE TERM or TERM
A whole term policy is an investment opportunity (it’ll earn you tax-free cash), but it isn’t the policy typically recommended by financial experts—there’s added fees, commissions, and it’s a permanent policy that is very expensive to forfeit. However, a term policy is set for a certain number of years, provides a fixed-rate, and while it doesn’t provide any investment incentive, it does provide you with full death benefits.
• In Your 20’s? Buy NOW
If you’re starting a family in your 20’s, you’re in luck! You can purchase a life insurance policy that will set you up for the next 30 years, very affordably — more so than it will ever be again!
How affordable is it? On the high-end, you can pay $350 to $400 annually and be set up for the next 30 years under a $500,000 policy. As mentioned, that’s on the high-end; you can opt for a $300,000 policy and it would be even more affordable.
• Consider Your Assets
This is where a financial planner will come in handy; before you buy, you’ll want to not only take stock of what your assets are, but what you want handled if something should happen to you. All of this will need to be figured into the face amount of your policy:
o How much is your income? Take out at least 5-8 times this amount.
o Do you want to provide for college tuition? Factor in this amount.
o How much do you want to spend on your funeral? Keep your family from having to absorb this amount, and factor it in, as well.
o Do you have a charitable cause you’d like to leave funds to be donated to? Add this into your coverage.
o Are there additional family members who rely on you financially? Make sure they’re taken care of.
This post was written by insurance specialist, turned professional blogger, Jesse Hughes. Jesse has been been involved in the insurance industry for a number of years now & has worked for some of the biggest name in the business. He now writes full time, contributing to all manner of blogs.