You have done everything you can to protect the ones you love. You have a great job, a good home to raise your family and some money saved up in the event of an emergency. Do you have enough life insurance? Many people do not fully understand term life insurance requirements, let alone how much they need to purchase.
What is Life Insurance?
Life insurance will give your family the money they need in the event of your sudden death. Many companies will offer polices ranging from $10,000 up to the hundreds of thousands of dollars. Should you pass away unexpectedly, your family will have the financial security provided by your life insurance policy to continue their lives comfortably.
What is Term Life Insurance and what are the term life insurance requirements?
The difference between term life insurance and permanent life insurance is that a term policy covers a specific length of time, or a “term.” The policyholder can opt for a one year or a five year policy, or a policy that lasts for 10, 20 or 30 years, depending on the insurance company and the term life insurance requirements. Term life insurance also features fixed premiums, meaning that your rate will not change every year. Equal payments are made at the same time, whether they are due every month, every four months, every six months or annually.
Why Choose Life Insurance?
If you are not there to earn money from your job, what is your family going to do? How will they settle your funeral costs? How will the bills be paid? Life insurance takes care of the financial strain that comes to a family after a wage-earner passes away. Because your family and friends may be severely devastated by their loss, life insurance will help to ease their financial concerns as they focus on grieving.
How Much Life Insurance Do You Need?
This is more of a personal question that is different for everyone. The amount of life insurance you should buy typically depends on your age, the amount of money your family requires annually, your income and the length of the term as stated in the term life insurance requirements. For example, adults between the ages of 20 and 30 should plan to receive 20 times the amount of their gross income, while elderly people may only expect to receive five times their income. If you have children who will need money for school or outstanding debt such as credit cards or mortgages, you may want to adjust your life insurance policy accordingly so that these matters can be handled appropriately after you pass away. The bottom line is that you should choose enough life insurance to maintain your family’s current lifestyle.
How Much Does Life Insurance Cost?
The cost of life insurance, and the term life insurance requirements, will vary from company to company. Typically, you can find around $100,000 worth of term life insurance coverage for around $25 to $50 per month. Term life insurance is cheaper than permanent, or whole, life insurance because it is set at a fixed rate instead of a lifetime. You can even get different policies from different companies. Some insurance companies will give you guaranteed coverage while others will ask you to take a physical exam. If you are in perfect health and are a non-smoker, your premiums could be significantly cheaper. Be sure to shop around for the best deal.