Many people want to make sure that when they pass, their affairs are in order. Getting a last will and testament together, designating power of attorney, and other measures are a good start. Looking at life insurance — way before you need it — is a smart financial move. Financial experts suggest that the best time to get it is in your 30’s or 40’s — the cost to acquire it can increase as you get older, but if you’re older and looking, there are definitely affordable rates you can take advantage of. Everyone should rest assured that life insurance costs may not be as prohibitive as they think. So let’s discuss the necessity of getting life insurance, what life insurance can help cover, and how you can go about obtaining life insurance.
Why Is Getting Life Insurance So Important?
Life insurance makes sure that if you pass away, your dependents or beneficiaries receive a lump sum of money to cover costs or to replace the income you provided for them. It sets up a measure of security so that they’re not left scrambling to pay for the funeral, pay off outstanding debts, or other financial responsibilities that will need to be taken care of.
More and more Americans are seeing the wisdom of purchasing life insurance. In 2016, 66% of Americans recommended getting life insurance to someone else, which was an increase of 11% from 2015. Almost 90% of people who were surveyed said that they agreed that most people needed some type of life insurance coverage and 40% of millennials were interested in a life insurance policy. Around three in five people have some kind of life insurance and almost 35% want to make a similar purchase in the next year.
What Costs Does Life Insurance Cover?
Typically, life insurance is often used to pay for funeral and burial costs or other final costs that pertain to estate administration, debt, or medical expenses. They can also help pay off federal and state “death” taxes.
In other cases, it can be used as an inheritance, if your heirs are named as beneficiaries or provide an income to dependents, if they relied on you for their primary financial stability. Depending on what kind of life insurance policy you get, you may also be able to use it as savings, as it’s tax-deferred. You may also be able to donate your life insurance policy to a charity of your choice, if you name them as a beneficiary.
As you can see, investing in life insurance cost can have many positive benefits — both during your life and after your death. You can rest easy, knowing that your financial affairs are in order and that your heirs won’t have to worry about meeting any financial obligations after you pass.
And, the life insurance cost may not be as brutal as you think — it can range anywhere from under $50 to under $100 per month, though this does often depend on how old you are, how healthy you are, and even your gender.
How Do I Get Life Insurance?
Most people opt for term life insurance, which tends to be less expensive, and is easy to understand. Basically, for each year you pay the premium, you’re all set with coverage. If you die during a period you’re covered, your beneficiaries receive the benefit. If you let the policy lapse or stop paying, your coverage is over.
Most people will obtain life insurance either through an insurance agent in your area or online. It’s important to do some online research first though, to obtain quotes and see what different providers are offering, as well as how qualified you are to obtain a good rate on life insurance.
Once your application is submitted, you’ll need to undergo a medical exam, to verify that what you’ve reported in your application is indeed correct. Once your application is approved, making that first payment will lock in your coverage.
Don’t stress about a life insurance cost — take action! It’s a smart financial move for both you and your family.