When to Get Life Insurance? 5 Signs You’re Ready
There are a lot of details to consider when you're getting life insurance for the first time. You have to think about who your life insurance beneficiary is, how long you'll need your life insurance for and exactly how much life insurance you can afford. All of this while considering your own mortality - it's heavy, we know.
Coverage amounts can vary widely between individuals, but there are common threads in how we calculate and decide upon what is the right amount of life insurance. If you think you're ready to take the plunge, but want to do a little more research first, take a look at these tips for how to choose a coverage amount.
Do you own a home? Are you working on paying back a substantial amount of student loan debt? Paying for private school for your kids? All of these financial responsibilities add up, and they are worth protecting. Figuring out the size of your duty is a helpful first step to deciding the amount of life insurance coverage you need.
Since life insurance claims are often distributed to beneficiaries in a lump sum (though other options are available), you may want to calculate how far into the future your spouse, children or other dependents may require your assistance. This can include mortgage payments, living expenses and even college tuition. Once you have this figure, you'll be able to easier calculate how much coverage you'll need.
It's easy to focus on those who might need you if you were to pass away, but don't forget to consider what funeral costs and medical expenses your dependents may need to take care of if you were to pass away. These expenses should factor into your final calculation.
Term length and coverage amount are undeniably connected. When asking yourself "how much life insurance can I afford," you may have to sacrifice on either term length or coverage amount in order to keep your rates manageable, knowing that you can review and renew your policy down the line. We all want affordable life insurance, but, of course, it may be hard to know what you can afford before you get your initial quote.
It's easy to see how the amount of life insurance coverage can vary from person to person. We don't all have a house, but, on the other hand, some of us have more than one. You may have one child, but someone else could have three. We all have different needs when we buy life insurance, but luckily, the questions we're faced with are relatively similar.
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