Have you been thinking about buying life insurance for the very first time? There are certain factors you should consider when buying life insurance for you and your family. At McKennon Law Group PC, our law firm is committed to helping families like yours make wise and informed decisions about life insurance and we are here to help every step of the way. Read on to learn more about what you should know about life insurance and contact our law group if you have any questions about getting started.
Why Do I Need Life Insurance?
You may be wondering why you need life insurance in the first place. Life insurance was created to help your family have financial security in the unfortunate event that you, your spouse or a parent passes away and leaves their loved ones in an unfavorable financial situation. Having a life insurance policy can help you pay off a mortgage, pay for a college education, fund your retirement or even help plan your estate and plan your will and testament. If you have loved ones or anyone close to you who depends on your income for support, that you feel would be put in a bad financial situation should you pass away, you should begin to consider paying for life insurance.
What Is Term Life Insurance?
Term life insurance gives you coverage for a certain period of time not your entire life. For example someone may purchase term life insurance for a period of time such as 25 years. If you purchase term life insurance you will need to pay an annual premium and, be advised that your term life insurance policy will not generate more cash value over time, so it is not a wise investment decision for everyone.
What Is Whole Life Insurance?
Different than term life insurance, whole life insurance does not cover a specific period of time. It instead covers, as its name suggests, the whole lifespan of the insured person. Whole life insurance is one of the most popular policies that we see at our law firm.
Whole life insurance can grow in value over time making it a wise investment vehicle for some people in certain financial situations. A whole life insurance policy will pay a predetermined, specific amount upon the death of the person who holds the policy and it offers protection on a lifelong basis, but that also defers tax. If you’re unsure which kind of life insurance policy is best for you, ask your lawyer.
How Much Life Insurance Coverage Should I Purchase?
There are many factors that a lawyer will take into consideration when advising a client upon how much money they should or should not purchase in life insurance coverage. In order to correctly estimate how much life insurance you or your loved one may need, you must consider the following criteria:
- How much debt you are currently in
- Your anticipated pension or social security benefits
- The future anticipated income of the life to be insured
- Any lifestyle changes a family will need to make after the insured’s death, such as a career change
- And much more
What Mistakes Should I Avoid When Buying Life Insurance Coverage?
There are many things to consider when purchasing life insurance. First and foremost be sure to talk with an estate planning lawyer in your area to mitigate the risk of making any mistakes while you file for and purchase life insurance. Some people mistakenly leave the beneficiary designation line blank. This could lead to many problems in the future when many different people are fighting over the same life insurance money when the policy holder passes away. Always read your life insurance application as carefully as possible before you sign it, as some mistakes can be easily made on your application. SOme of these mistakes include failing to provide correct information, as well as also failing to understand terms and conditions of your policy.
Read your life insurance application carefully before you sign it. You should always talk to a lawyer before you sign any important contracts or documents as you need to understand what the terms and conditions say, and what rules you need to abide by. For example, tobacco use, drug use, even your financial income in addition to other factors can affect the terms and conditions of your policy. If you fail to understand the conditions or make a mistake on your application this could affect how much money you may be entitled to in the future.
Schedule a consultation with McKennon Law Group if you have questions about filing a life insurance policy.