No matter what stage you and your family are in, your family’s finances face many
Life insurance is a critical component in preserving your family’s finances no matter
what happens to you.
Not often thought about as an essential component in your overall financial plan, life
insurance can preserve your assets and pay off debts.
“A great way to make sure that your
insurance costs are accounted for is to
make a budget that includes life insurance
as a set monthly expense.”
Budget for Security
With so many expenditures competing for a share of your income, it is sometimes hard to make something like life insurance a payment priority. As a young adult starting a family, it may seem like a juggling act just to get the mortgage, health insurance, and student loans paid. When you add other lifestyle essentials like phone bills and entertainment, life insurance gets kicked out of the picture. When you are at the height of your career, your finances will most likely be stretched to save for retirement as well as help the kids out with college expenses.
If it is hard to make ends meet now, what will happen to your family if you are no longer there to provide income to the household? The mortgage, utilities, childcare, and credit cards will all continue to need to be paid. Children will still need higher education and the surviving spouse will still need to fund retirement. A great way to make sure that your insurance costs are accounted for is to make a budget that includes life insurance as a set monthly expense.
Life Insurance Options
With term or whole life options for life insurance, there is sure to be an option that will address your needs as well as your budget. Choosing a life insurance policy is not a one size fits all proposition. A young family’s need for life insurance in New York may be vastly different than a retired couple living on a ranch in Montana. It is a good idea to consult with an agent from your local area to determine what type of policy would be right for you.
Term life insurance provides coverage at a set rate for a specified term of time such as 20 years. After that term is over, the premium will rise in order to continue coverage. If the individual dies during the coverage period, the benefit will be paid.
Whole life insurance lasts for as long as the premium is paid or until the maturation date. This date is either at the death of the policy holder or 120 years of age. This type of insurance has a cash value and the proceeds are not taxable. While the premiums for a whole life policy are more expensive than term, the policy will have a cash surrender value that grows over time.
Even without a family, anyone with financial obligations needs to make sure that their commitments would be covered in the event that they passed away. If you had a family member or friend cosign on a loan and you died, they would have to pay your debt. Having an insurance policy can keep loved ones from having to pay your bills with their own funds. To truly preserve your family’s security, life insurance is as necessary as groceries.
What are your best tips for protecting your family’s finances?
Share your thoughts and comments with us.