The Role of Life Insurance
The most important role of life insurance is protecting your family’s home and lifestyle in case something should happen to you. Basically, you buy life insurance to make sure the people you care about are taken care of at your death.
How Much Do I Need?
You may have heard the old general rule of thumb is 10 times your annual income. However, you can’t really use this rule if you want a personalized approach to life insurance. Think of it this way: Joe Smith may have 5 kids and a large mortgage on his home while Susan Johnson only has 1 kid and no mortgage on her home. Logically Joe and Susan have drastically different needs. So, that “general rule of thumb” doesn’t always apply. That’s why it’s important that you work with a professional so that we can tailor a plan to meet your needs.
The 2 Basic Types
- Term is like renting. It never gains any value and it ends at the end of the term you selected (example - 10, 20, or 30 years). Therefore, this option is usually less expensive.
- Permanent is intended to provide life insurance benefits for your entire life span. It also has the ability to gain cash value which can be used by you even before death.
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