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Posted on October 6, 2020

Life insurance

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By Hayden Willner, Relationship Manager

Life insurance is something that most people think about and know that they probably should have but is often something that gets put off.  Life insurance for young and healthy individuals is affordable and can provide you with peace of mind. For 2020 the average funeral cost is between $7,000 and $12,000 and that is just the start of the bills. If your spouse passes away, you will also now have to find a way to pay for your mortgage, utilities, other bills, and children on only your remaining income.

Life insurance is affordable and is an important thing to consider. Some good questions to start with on determining if life insurance is right for you is: Do I have dependents? Do I make a significant percentage of the family income? Do we have any large debts? If one of the spouses makes significantly more than the other, you may want to get life insurance for the higher earner.

Determining how much life insurance you need is important. There are a few ways to determine how much life insurance is appropriate for you. Option one is finding out what your expenses minus assets are. Your expense would include mortgage, childcare, insurance, and basic living expenses. Assets to consider are savings, social security benefits, or any other form of income. Option two is a salary estimate. A general way would be taking your current annual income and multiply it by 10. Example if you make $50,000 a year multiply that by 10, the minimum you would want to apply for is $500,000.

There are different types of life insurance for you to choose from. The most common are whole life or term. Whole life is just that, it is for your whole life. The premiums on whole life are generally more expensive than term for a few reasons. Whole life lasts throughout your entire life. Whole life costs more because it builds cash value, the cash value builds over time and can be tapped into and used as a loan after having the policy for several years. Term life insurance is a more affordable option. As the name states it is for a specific term, usually for 20 to 30 years, but can be shorter. With term you choose the amount of money you want as a death benefit and if the insured dies in the stated term the death benefit is paid out. If the insured outlives the policy, no death benefit is paid, and the policy expires. There is an option to do a term policy with a return of premium. This option is more expensive than the base term policy, but if the insured outlives the policy you will be refunded on all premiums paid.

Finding which type of life insurance is right for you is the first step. If you don’t know which type is the best for you, ask a professional for their opinion. Regardless of the type of policy you choose, life insurance is something everyone should strongly consider. Whether you want it to make sure your family can continue paying the mortgage or just to be financially sound in the case of your passing, life insurance is one of the first things you should think of when it comes to your financial future.