Can Life Insurance Give You Peace of Mind?

1. Parents of young children – Who have children that are financially dependent on their salary for basic things like food and shelter

2. Parents of older children – Whose children depend on them to pay for college, and other things

3. People who are married – Whose spouses would take a financial hit if the other died

5. People with debt – College students who have significant student debt, people with mortgages or business loans, anyone with outstanding significant debt that would pass on to their loved ones

6. People who dont have money to cover funeral/burial expenses – Life insurance is often purchased to make sure the cost of burial/funeral doesnt get passed on to loved ones

Which Type of Life Insurance is Best for Peace of Mind?
There are two main types of life insurance: term and whole. Term life insurance is purchased for a specific number of years. During that time period, you pay monthly premiums to the insurer in return for the guarantee of a death benefit to be paid out to your beneficiaries upon your death. When the term is over, so is the coverage (though you do have options check them out in our blog post about what happens after term life insurance coverage ends).

Permanent life insurance is a little more complicated. It offers a death benefit, but with no expiration date, and there is also a savings component known as cash value.

When it comes to buying life insurance with the goal of peace of mind, neither term or permanent has a distinct advantage over the other. The choice depends entirely on your own personal and financial situation.

For many, permanent life insurance is not an option due to its high price tag. Term is much more affordable and it accomplishes the basic goal of taking care of your loved ones financially. For those who can afford permanent life insurance, the question becomes one of financial planning and whether permanent life insurance can be a good way to cover your loved ones while making a sound investment. You can read more about it in our blog post about whole life insurance as an investment.

1. Standard of living method – How much money will your loved ones need to maintain their standard of living if you die? Remember, this isnt just for one year, but its for however many years your loved ones will be financially dependent.

2. Financial obligations method – Forbes recommends asking yourself which financial obligations you want your death benefit to cover. Income replacement, mortgage and other debts, college tuition, weddings, etc. add them all up. If you have any savings, you can subtract that from the total, and presto: you have arrived at the amount of coverage you need.

3. Funeral coverage – If you only need life insurance to cover funeral expenses, your calculations will be a lot easier. According to Lincoln Heritage Funeral Advantage, the average cost of a funeral and/or burial ranges between $7000 and $12,000. Your life insurance coverage need not exceed that.

Bottom Line
Life insurance cant prevent disaster, but it can offer you peace of mind knowing that your loved ones will be taken care of in the event of your death. Whether you choose term or whole life insurance, it doesnt matter, as long as you achieve your goal of offering financial coverage to your loved ones.

At the same time, its important to choose the right policy for you this will ensure that youre making the wisest decision and leaving as much as possible for your loved ones. As is the case with all big financial decisions, its best to consult with an insurance or financial advisor to make sure you choose the life insurance policy thats best for you.

4. Someone with no money to cover funeral expenses

5. Some with debt
   then getting life insurance is a good idea, regardless of how old you are.