Essentially, what Life Insurance can do is provide family and loved ones with 3 very important things:
1. Enough finances to cover the costs of the memorial service, whether it be a funeral or cremation service.
2. Provide a detailed plan of final wishes of the deceased to avoid confusion.
3. Assist with arrangements and negotiations (restricted to certain Life Insurance Providers)
Let's talk about each individually.
Most of us need life insurance at some point in our lives. But don't buy a policy just because you heard it was a good idea. Life insurance is designed to provide your family with financial security in case you, your spouse, or a parent passes away.
You can use any number of planning tools to get an idea of the amount of coverage you'll need for your policy. The easiest way is to simply take your annual salary and multiply by eight.
Another way: Multiply your annual income by the number of years left before your retirement benefits kick in.
Once you figure out how much coverage you'll need, you’ll need to find the best insurance policy. Your main options are term life, which may better fit your current budget, or whole life, for permanent coverage that also grows cash value.
Consider term life for:
✅ Death benefit protection without cash value accumulation.
✅ Life insurance on a limited budget.
✅ Ability to convert to long-term life insurance.
Consider whole life for:
✅ Long-term death benefit protection.
✅ Stable cash value accumulation.
Term Life Insurance:
✅ Coverage for temporary needs with options that allow you to prepare for the future.
✅ Length of coverage is a set period of time, usually 10 to 20 years.
✅ Pay premiums for as long as your coverage lasts. With many policies, premiums are locked in for a set period, and may be less expensive than whole life premiums during that period.
✅ Has no cash-value accumulation
✅ Death benefits can be transferred to beneficiaries tax free.
Whole Life Insurance:
✅ Guaranteed lifetime protection and access to cash value that's guaranteed to grow.
✅ Premiums are guaranteed never to increase, and there are options for how often and how long you pay—monthly, quarterly, or yearly.
3. Smoker or Non-Smoker
4. Health and Medications
5. Amount of Insurance
All of these factors will play a role in determining the cost for your Life Insurance.
However, the average we typically see is between $35-$150 per month, depending on how much life insurance you purchase.
With that said, you could also start with the bare minimum to at least lock in rates at your current age and health.
For example, let's say you're currently 55 years old. You know you need Life Insurance but you can't afford $75 per month for it right now but you will in the future.
You could get as much insurance as possible for $15 per month (required minimum) and then increase the amount of insurance later on when you're able to afford it.
Let's say you increase the amount 2 years later when you're 57 and you've also started taking medications for blood pressure or cholesterol.
Because you already locked in your rates and were approved at 55, the additional 2 years of age and the added medications will have ZERO impact on your rates!
Obviously you will pay more for the added amount of insurance. However, the rate for the increased amount of insurance is still based on when you qualified at 55, not 57 and the medications!
This is a great way to begin setting up your Life Insurance plan without breaking the bank if you're on a budget.
Either way though, at the end of the day, it's tough to put a price on the peace of mind knowing that your family is taken care of should anything happen.