Quite often when people call the office inquiring about Life Insurance, they usually don't what kind of policy or how much coverage they are looking for. When this occurs, I usually cover three main areas or steps in determining the best policy for their need.
The first step or question to consider is, what is the primary need for the coverage? For instance, are you looking to secure coverage to pay off your debt, pay for last expenses, or replace your lost income for your beneficiary? After all it won't be your problem, but rather the ones you leave behind.
So I usually recommend to make sure you have a large enough policy so your loved one can pay off all of the household debt. This would include a mortgage, credit card debt, car loans, etc....
Step two in this process is to evaluate if you want to add additional coverage to replace a certain number of years of your lost income. This step is crucial as you will be going through a very emotional process so you may need these additional funds to help you get through the initial grieving process. Think about how difficult it would be if you had to go through this and also go back to work or look for employment to make ends meet.
Once you determine how much coverage you will need, the third step will be determining how long you will want to lock in your coverage. The typical policy durations that you can secure are a 10, 15, 20, 30 or permanent policy. The longer duration that you secure, the higher your premium will be as the insurance carrier has a greater chance of paying an insurance claim.
You may ask, why would I take out a shorter duration policy? Cost would be the main reason, but you may also need this coverage until you have a certain amount of debt paid off or savings built up. With most families, you need a pretty substantial amount of coverage when you are younger as you may have a mortgage, young children, and limited savings. As these items change as you get older, you will typically need a lesser amount of Life Insurance protection. Some people even phase out their coverage altogether when the kids are grown, the mortgage is paid off and you have a decent nest egg established. Makes sense right?
A lot of clients consider securing a small block of permanent coverage for say 25k and then a much larger block of term coverage until the kids are out of the household. Once things financially improve, you can then scale down the amount of Life Insurance protection or phase out the term coverage altogether and just keep the permanent coverage for last expenses. The bottom line is proper planning and education are the keys in determining the proper policy.
The professionals at Southern Insurance Group can help you structure the perfect product for your need. Give us a call today for your detailed proposal at 352-243-9000.
Southern Insurance Group