The Importance of Life Insurance

February 28, 2014

Safe Harbor Insurance understands that a conversation about life insurance is not always an easy one, but it should be part of your planning. There are many good reasons to consider purchasing life insurance from Safe Harbor Insurance . Life insurance would give your loved ones the resources to pay off debt, continue living the same standard of living, and added financial security.  Also remember the tax-free proceeds from life insurance will provide your loved ones with a tangible expression of your concern and thoughtfulness.

There are different kinds of life policies, but we usually recommend term life.  Life insurance works just like other insurance policies. You pay your premium and sign a policy that’s binds you and your insurance carrier an agreement where upon your death, policy benefits will be distributed to your beneficiaries.

Term life insurance is very cost effective.  The price is based on how much coverage you need, current age, and length of time you would like the coverage. You pay as you go and can drop the policy at any time. Usually term insurance is purchased in 5, 10, 15 year terms, but again you don’t have to renew. It is good to use a longer policy term, as it locks in the premium.

How Much Life Insurance Should I Buy?

The amount you buy will depend on your individual circumstances, but general y 8-10 times your annual earnings is a good starting point. For example, if you earn $50,000 annually, we assume that your standard of living is in that range. In order for your loved ones to continue in that standard you would need an investment that generated around $50,000 in yearly interest income. $500,000 in life insurance could return $40,000 to $60,000 per year, depending on the market and economic conditions.

Perhaps the most crucial piece of information to keep in mind during your search for life insurance is the importance of shopping around. It is important to ensure that the insurance you purchase is suitable for your particular needs, as well as thinking about how much you can afford to pay. Call Safe Harbor Insurance for a free review.