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Top 5 Things You Should Consider With Life Insurance

Top 5 Things You Should Consider With Life Insurance

If you are considering a life insurance policy, there are several factors you should consider before making the ultimate decision on which plan is best for you. 

Here are the top five things to consider when it comes to choosing a life insurance policy.

Living Benefits

As many may know, life insurance policies offer a death benefit that is paid out to the policyholder’s chosen beneficiaries. However, many may not know that some policies also provide living benefits for the policyholder. 

Some policies accumulate a cash value, which can be borrowed against by the living policyholder. However, think of this as a loan. If you do not pay this amount back before your passing, the death benefit for your beneficiaries will be lower.

Choose Multiple Beneficiaries

Speaking of beneficiaries, it is usually best to choose more than one beneficiary to receive the death benefit. Granted, who your beneficiaries are and how many there are is ultimately up to you. However, if you choose only one primary beneficiary and they precede you in death, who will the death benefit go to?

For this specific reason, it would be best to choose at least two beneficiaries so you can ensure that the benefit will still be given to a trusted and cared-for individual.

Term or Permanent

Before deciding on a policy, you need to consider your health and if it would be best to purchase a term life policy or a permanent life policy. 

Term life insurance is the easiest form of life insurance to qualify for and purchase because it only lasts for a specific time. Many terms last 10, 20, or 30 years, and are best used for policyholders expected to pass within that time frame. 

Permanent life insurance, such as whole or universal, is not designated to a specific term but lasts from the time of purchase to death. To keep the policy active, the premium payments must be paid regularly. It’s also important to note that permanent life insurance policies cost more compared to term life.

DIME Method

To determine how much insurance you need, you can use the DIME method, which stands for Debt, Income, Mortgage, and Education. You will take all the costs that fall under these categories and add them together, giving you the amount you owe, which could ultimately fall into your loved ones’ hands after your passing. 

By following this method, you will have a better understanding of how much insurance you need.

The Earlier, The Better

The cost of life insurance is based on health status and age. The younger and healthier you are, the less expensive a policy will be. As you get older, the more likely you are to develop health problems that will impact the premium payment. To avoid these costly premiums in your old age, consider purchasing a life insurance policy while younger.

For more information regarding life insurance policies, reach out to Joseph Cioffi Insurance today!

Which is better: Term life or Whole life insurance?

Which is better: Term life or Whole life insurance?

By investing in life insurance, you are guaranteed that your loved ones will be financially covered in the event of your passing. It can provide financial stability to pay off any debt, mortgage payments, or other financial obligations that may arise for your beneficiaries.

With different life insurance options available, how do you know if you’re choosing the right policy?

What is term life insurance?

Term life insurance provides coverage for a certain amount of time. If you happen to pass away during that specific timeframe, your policy will provide a payout to your beneficiaries. If you are a beneficiary to someone who has a term life policy, then you will receive a payout. This makes the term life policy have no cash value until the policyholder dies.

It’s also possible for the premium to increase over time.

What to consider before choosing a life insurance policy?

There are several factors to consider when deciding how much life insurance you need, such as:

  • Your age
  • Your current state of health and if you have any concerns for your future wellbeing
  • Your debt amount
  • Your family’s financial needs
  • Your retirement plans

It would be best if you also considered the cost difference between term life and whole life insurance. Because a term life policy does not last throughout your entire lifetime and is not at cash value, you will be paying a smaller premium compared to whole life insurance. Your gender and driving record can also impact what you will pay for these policies. For example, men typically pay more for life insurance because of their shorter life expectancy. If you have had problems in the past regarding your driving history, you may have to pay higher rates. Also, take into consideration that your age and current state of health can impact the premium you pay.