3 Things to Consider Before Taking Out Life Insurance

One of the most important decisions you can ever make is to take out life insurance. It will protect the people you will eventually leave behind, and it can also help far before then. However, you may not know exactly what you need in a life insurance policy.

There is a plethora of things to consider when taking out life insurance, but we have compiled the three most necessary. These three things to consider before taking out life insurance will be able to help you with your important decision.

How long do you need coverage?

You can decide to take out life insurance for a certain period of time, or a lifetime, depending on your needs. When you’re deciding on how long you need life insurance, there are a few things you need to consider:

  • Why you’re purchasing the policy in the first place
  • If you’ve just had a child
  • If you’ve recently bought a house
  • What you will receive
  • What your family will receive

For example, if you have just had a little one join your family, you would likely go for a policy that covers you until they’re no longer financially dependent on you. That can range anywhere from 20-30 years if you plan to cover their college/graduate tuition. Then, it is much the same if you’ve just purchased a house.

Owners of a new home may want to consider looking at a 30-year policy because that is how long your mortgage usually is. If you only have a 20-year mortgage, it is also a good idea to go for a 30-year coverage just in case of refinancing or circumstances changing.

A beneficiary

Firstly, let’s understand what a beneficiary actually is. A beneficiary is someone who receives the proceeds from your life insurance policy. However, there are a few things to remember when you’re naming your beneficiaries, here are some options:

  • Choose one or multiple people
  • The trustee of a trust that you have set up
  • A charity or not-for-profit organization
  • A minor (be careful as sometimes they cannot receive funds)
  • Your estate (be careful as this may have tax implications

Because you are the one giving your assets away, you are named as the benefactor. This means, that with you in charge, you can decide on the who, what, when, where, and why of the assets you’re giving away. You need to make sure that you remain very specific about who receives it for the sake of your family and your wishes. It is also a great idea to consider no exam life insurance.

Insurance costs

There are plenty of costs associated with life insurance, but the cost you will pay greatly depends on several factors including:

  • Your age when you start your policy
  • Your health when you start your policy
  • Policy features (how long payments must continue)
  • The level of cover that is chosen
  • The type of cover that is chosen

In plenty of cases, a life insurance policy will actually cost less per month than what you pay for all of your streaming subscriptions.

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