Life insurance is quite a necessary these days for the people in the USA. If you are thinking of purchasing an affordable life coverage, then you will have some common and basic questions regarding life insurance. This article helps you to answer few of them such as how you will know if you really need life insurance, how much is sufficient for your needs and which type of coverage is suitable for your requirements.
How Do I Know if I Need Life Insurance?
The people who are careful savers throughout their lives don’t need life insurance as they have saved enough of wealth in order to sustain their family requirements. On the other hand, people with no dependent don’t need life insurance, if they are having sufficient amount of money in the bank to cover their expenses. So, life insurance policy is necessary in case of death and your family members would be left in a financial bind without additional income.
The reality of life is most of the people need life insurance although no everyone has enough life coverage to cover their funeral expenses, paying off mortgage loans or replace lost income in the USA.
In 2015, according to LIMRA, 6 out of 10 people have some sort of life coverage and 30% of Americans assume they should have more life insurance for themselves.
In case of lack of finance when a person dies, then it will be covered by life insurance. Life insurance gives you sense even if you are not having dependents, on the other hand it gives the additional source of cash.
How Much Life Coverage Should I Buy?
Prior to thinking, how much coverage you should have, consider your savings and what are all the other insurance policies that you are having. If you have little younger children going to college, do consider their education expenses and other needs. If you are having an elderly person at your home, think about them and take decision accordingly.
In this regard, it’s better to aim for optimized coverage amount but up to necessary level rather than to aim for very low and let the people down.
Stat says, around 70 million Americans think they need more life coverage.
Which Type of Coverage is Suitable for Me?
When it comes to the option of choosing life insurance policy coverage as per your need, mainly there are two options available – permanent insurance and term insurance.
Term life insurance:
It is considered to be a good choice for temporary requirements or in case if you are having limited funds because-
- It provides coverage for certain duration of time.
- Less expensive than the permanent life insurance.
- Offers a higher coverage amount for lower cost.
- The premium amount will be set for time, usually 10, 20 years or even more than that.
Permanent life insurance:
It is considered an option for long term requirements or regular income for your spouse, end of life expenses and also an inheritance for children –
- It can offer benefits until you are alive.
- It is quite expensive than term life insurance as the premium amount doesn’t increase the life of the health policy and increases cash value as well.
- Builds cash value which you can withdraw and pay loans or other expenses.
The real and most important thing you will be buying with life insurance is peace of mind and also a better sleep at night because there is no wary of burdening family members for funeral or other unpaid debt after death.