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Life Insurance – What Do You Need? How to Know

Dime

Life Insurance – How do you know what you need?

While life insurance is not fun, it may be necessary for the good of your family. One popular simple guide to help you decide how much life insurance you need uses the acronym “DIME”. Add these four categories together to help you determine the total amount of life insurance right for your family.

D – Debt   How much debt do you have? The amount you owe is passed on to your family.  This amount should also include funeral expenses as well as credit card, car payments and student loans

I – Income  One of the main purposes of life insurance is to provide your family with income. Many people multiply their yearly income by the number of years until their youngest child is 18.

M – Mortgage   The remaining balance of your mortgage loan should be included to make sure your family does not  face the hardship of losing their home.

E – Education   If you have children, include the cost for their college education. Figure a minimum of $100,000 for a four  year degree for a state school for tuition and dorm fees. The cost will be more if you are considering private or out-of-state schools.

There are a number of options for the type of Life insurance that best fits your needs. Two of the most popular are:

Term Life Insurance  Term life insurance covers you for a specific period of time, or term, that you choose. When the time period is over, it expires similar to an auto insurance policy. This can provide an inexpensive way to protect your beneficiaries.  Variations include guaranteed renewal plans or options to convert to another type of policy. It’s important to remember that rates generally increase along with the insured’s age.

Permanent Life Insurance  These policies provide a lifetime of coverage and build up cash value that remains available to the policyholder. Permanent policies include Universal and Whole Life Insurance. This is the most cost effective long-term option because of stable premiums and the availability to access money invested in the policy.

Many people benefit from a combination of Term Insurance to cover higher debt when they are young and Permanent Insurance to keep rates low with age. Contact the experts at Cobb-Hall Insurance to assist you with your decisions.

Life Insurance Decision Guide

Life Insurance – How to Decide

Many people don’t know where they are going or how to get there when discussing life insurance.  yogi berra The following information can help you make decisions.

Basic Life Insurance Information

Whether you are married or single, a death can create financial hardship. Remember to consider expenses such as childcare, college, funeral expenses, and mortgage when determining your needs.

There are two basic types of life insurance: term life insurance and permanent life insurance. The type of life insurance policy that best suits you will depend on your unique needs.

Option #1: Term Life Insurance

Just as its name implies, term life insurance covers you for a specific period of time, or term, that you choose. Since it offers a death benefit but no cash value, term life insurance is an inexpensive way to protect your beneficiaries for a specified period of time.

Renewal term life insurance can be renewed at the end of the term, at the option of the policyholder for a limited number of successive terms. It can also be converted, or exchanged for a permanent insurance policy, down the road. It’s important to note that rates generally increase along with the insured’s age.

Option #2: Whole Life Insurance

Permanent life insurance is any form of life insurance other than term. Examples are whole life, universal life and variable life. These policies combine term life insurance with a long-term, tax-sheltered savings plan.

Whole life is the most basic type of permanent life insurance. It provides coverage that lasts a lifetime and builds up a cash value that you can borrow against, withdraw or use to pay future premiums.

A life insurance policy with a cash value is ideal for those who have a lifetime need for insurance protection, prefer stable premiums over the life of the policy, want a policy that allows them to build tax-deferred values, and value the high degree of coverage the policy affords. While rates for a whole life insurance policy remain stable over the life of the policy, premiums are initially more costly than for term insurance.

How Much Insurance Do I Need?

To find the right amount of coverage, it’s important to consider your dependents’ current lifestyle and needs against future sources of income and assets.

Contact the caring experts at Cobb-Hall Insurance for more details.