How to Start Planning for Life Insurance
When you think about life insurance for the first time, you need to consider the best time to secure a policy, how much coverage you require, and even what kind of life insurance policy is best for your needs. It may leave you with questions.
One way to help you sort through your questions is to start the process of planning for life insurance. It means looking at your family's financial needs, both short and long term, and from there, determining the best coverage for you.
Here is how you can start life insurance planning and what to consider along the way.
What is Life Insurance Planning?
Life insurance planning is one way to help provide your family with some financial protection after you pass for a more secure future.
With a policy in place, your beneficiaries receive your death benefit after you die. They can use that money to pay off loans, cover educational costs, or as income replacement.
Considering these potential financial struggles now is why the importance of life insurance in financial planning cannot be understated. Life insurance can play a significant role as you develop your short- and long-term financial goals and plans.
How to Begin Planning for Life Insurance
Here are some of the main factors you'll want to think about as you start planning your options.
Determine Your Coverage Needs
Now that you're considering securing life insurance, the first question you probably have is, 'How much life insurance do I need?'
The answer depends on your financial situation and your specific needs. If, for example, you have a young family and are the primary income earner, consider what the loss of that income could do to your family. You may want enough coverage to help replace your income for a time, as well as pay for your mortgage or rent, monthly bills, and other expenses.
Look at your finances, including income and debts, to help determine what you might need. Using a life insurance calculator can help with the basics. Speaking with an agent about your situation can also help provide some clarity.
Explore the Types of Life Insurance
There are many kinds of life insurance, and depending on your needs, some may fit your situation better than others.
For many, especially those starting a family, Term Life Insurance may be an option. Term Life Insurance is typically more affordable for the young and healthy and lasts over a set period, such as 10 or 30 years. In addition, a term policy can help cover expenses, such as college costs, if you were to pass away unexpectedly while your children are still young.
Permanent Life Insurance, on the other hand, offers an entire lifetime of protection. It's typically more expensive. However, a permanent life policy can generate cash value over the years, providing an added benefit for many.
Consider Your Life Stage
There are also ages and life stages where one type of life insurance product might be a fit for your needs, including:
- Life Insurance for New Homeowners: As you go through the homebuying process, you'll want to consider whether your loved ones could cover the mortgage costs without your income.
- Life Insurance for Parents: Growing your family comes with a lot of additional responsibilities. While planning for life insurance, think about how a life insurance product may offer your children another layer of financial protection. Having a child is one of the most impactful events in anyone's life. Pregnant moms and parents-to-be can also explore their life insurance options.
- Life Insurance for Those Under 40: You may have a young family, recently married, or switched jobs. With any of those life events, you'll have additional financial responsibilities that you want to help ensure your family has protection to help cover childcare costs, settle debts and pay down the mortgage.
- Life Insurance for Those Middle-Aged with Dependents: Entering middle-age may see your children get ready to leave the nest and pursue higher education. If you were to pass unexpectedly today, would your family be able to cover those costs?
- Life Insurance for Retirement: As you enter retirement, you may think you don't need coverage. However, there are life insurance products with death benefits that can help you cover burial costs, pay off debts and provide your spouse with additional income after you're gone.
Decide the Best Life Insurance Company for Your Policy
As with life insurance products, life insurance companies offer different features and benefits too. AIG Direct agents can help you select the best life insurance product and life insurance carrier to meet your needs, with reputable carriers like American General, Mutual of Omaha, Geber, and Globe Life Insurance. If you're interested in learning more, read what to look for in a life insurance company. You can speak with an AIG Direct agent or get a quote today.