Understanding Life Insurance Coverage

A common mistake that many people make when they are looking into adjusting their policy or buying additional coverage is that they forget about all of the different types of coverage they already have. For example, if you are married, you likely have an insurance policy covering your spouse either as part of your company benefits or through a family plan. You may also have so-called term life insurance policies for yourself, your children, and even your grandchildren depending on your situation. At the same time, you may be paying for disability protection in order to help replace lost income if you become injured or ill and cannot work.

If you want to add additional life insurance coverage to your existing policies, you need to thoroughly evaluate all of the current coverage you have in order to avoid paying too much for additional policies that may duplicate your other insurance benefits. For example, if you are paying for term life insurance on each child through their college years but maintain a family plan with no effective age limit for your spouse, buying individual plans after the children leave home will be far more expensive than keeping up with just one policy while they are still dependents under your roof.

Choosing Life Insurance Based On Age And Health Status

One of the most important things that many people forget about when they look into buying life insurance is how poor health or advanced age will affect the premiums. In general, buying life insurance after age 50 is significantly more expensive than younger people because of the increased risk factors for older individuals. On the other hand, a relatively healthy person in their twenties or even thirties may be able to purchase a less expensive term policy with no medical screening because they are unlikely to have inheritable conditions that would make them ineligible for coverage.

Life insurance might be confusing because of all the various options, but there are 5 compelling reasons to buy life insurance if you have dependents.

1. You need financial protection for your loved ones

Life insurance provides financial protection for your family should you die unexpectedly. This protection will help them pay off any debts tied to you such as a car or student loan. It will also help them pay for any ongoing expenses that you were covering such as utilities or groceries.

2. You want to provide your family with a means of income

Life insurance provides your loved ones with an immediate cash value. The amount received can be used to ease the financial burden caused by your death. For instance, if you were the main provider of your family, they may not feel prepared to take over your role. The money paid out through life insurance could help ease their financial burden while they search for a new source of income

3. You want to provide your children with dependable funds for their future education and care

Life insurance can be used as a reliable way to pay for your child's education and care. Perhaps you would like to leave enough money on the table so they can attend college tuition-free. Or, maybe you want to make sure they have dependable funds for their future care and living expenses if something were happen to both parents.

4. You want an inheritance to pass on

Life insurance is a great way to provide your spouse or child with an inheritance of funds to pass on. Instead of leaving them the conventional inheritance that might not carry as much weight, consider using life insurance. Life insurance provides a reliable means of increasing the size of their inheritance.

5. You want a tax-free way to leave a legacy

Finally, life insurance can be used as a tax-free way to leave behind funds for your loved ones. For instance, most inheritances are taxed at 30%. However, life insurance proceeds are free from this tax.

Conclusion

The bottom line is that before you buy a life insurance quote, it's important to carefully review your existing policies as well as any other coverage that may already be in place. Only then can you decide if additional coverage is needed or whether you should look into changing your current policies so that they cover everything from car insurance repair bills to final expenses.