As we grow older, we must begin to answer important questions about our lives and the lives of our loved ones. This means addressing tough issues such as death and what will happen to family members in the event of a tragedy. When considering a life insurance policy, there are several key considerations that individuals should keep in mind. Both short-term and long-term needs and financial conditions should be evaluated. The most important goal is to ensure that a family’s financial plan will remain stable in the event of your absence.
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Life Insurance Considerations
Key considerations for choosing the right life insurance policy cover a broad spectrum of the policyholder’s life. These include details such as marriage, debt and home purchase, children and other dependents, career and income changes, and retirement. Even after a life insurance policy is chosen, these key considerations should be evaluated roughly every five years to ensure that any major changes will not have a negative impact on the policy or the policyholder’s loved ones.
Debt and Home Purchase
Life insurance policies can work to help offset certain costs associated with larger investments, including the individual or family’s home. Debt is also an important issue for consideration, as policyholders need to be sure that they select a policy that is adequate enough to cover needed ongoing payments. As a result, a life insurance policy may help families achieve debt relief. In times of grieving, avoiding added stress of finances can play a significant role in coping with loss.
Children and Dependents
Children and other dependents present a broad range of financial needs that occur over the course of their lifetime. Raising children will require a number of expenses such as diapers, food, clothing, and college tuition, to name a few. Statistics show that even without accounting for college tuition, children cost individuals and families an average of more than $300,000 until they reach age 18.
Calculating Life Insurance Needs
Before selecting a life insurance policy, prospective policyholders should make sure to calculate current financial needs and issues. Additionally, financial projects should be made to help take into account any foreseeable changes or issues in the future. Life insurance is all about protection and planning, which means that these projections of the future play a critical role. Key components of calculating life insurance needs include the assets needed after the policyholder’s death, as well as the income that will be needed to ensure that loved ones can maintain an adequate standard of living for the household.