Life insurance doesn’t have a designated colored ribbon or rubber wrist band, but it does have its own month. September, we are reminded by the National Association of Insurance and Financial Advisors (NAIFA), is life insurance awareness month. Seventy-five million American families have some form of life insurance protection, and in 2009, NAIF claims beneficiaries received $59 billion in policy payouts. But for the estimated $95 million adult Americans without coverage, now is a good time to shop for life insurance quotes online. And if you’re one of the average policy holders that experts say carry only 3.5 times their annual income in coverage, use this life insurance awareness month opportunity to review your life insurance coverage.
Life Insurance Awareness Month: How much life insurance should you carry?
The answer depends on why you’re buying life insurance coverage. If your goal is to provide your family with sufficient funds to maintain their lifestyle after you’re gone, many insurance experts say you should have coverage that is at least 10 times your annual gross income. After all, you don’t want your spouse to have to sell or mortgage the family home, borrow money, deplete savings accounts or take an extra job to make ends meet. Should you need to provide for a disabled dependent, you’ll want to be certain your policy is sufficient to maintain his or her long-term quality care.
Life insurance isn’t just about death benefits.
Permanent forms of life insurance such as whole life, can also provide a more secure way to set money aside for a child’s college education, your retirement or a second home.
There are a variety of life insurance options but they basically come down to term life and permanent life. Term policies carry no cash value. They pay a death benefit to your beneficiaries should you die during that term. Typically, your premiums will increase regularly as you age. Depending on your policy that increase can be assessed annually or every 5, 10 or more years. Permanent life, on the other hand, accrues cash value over your lifetime. Your premium is generally front-loaded so that you pay more in the early years of the policy to set aside some immediate cash value and pay for underwriting, medical costs and agent commissions. After the first few years, premiums level out for the rest of your life. Some types of permanent life are virtually risk-free and guarantee a rate of return for the life of the policy. Others, like variable life, invest funds in the stock market where returns can fluctuate widely. In most cases, you can borrow against the cash value in a permanent life policy or wait for the age specified on your policy when you are required to cash out your policy.
You can shop for life insurance quotes online here at EINSURANCE.com and get competitive quotes from top-rated companies.