Life insurance premiums are one of the many types of additional expenses that younger individuals typically consider unnecessary. This type of thinking can have disastrous consequences. If you have a family, or someone that depends on your financial support, then life insurance may be one of the most important purchases you will ever make.
In todays environment there is a plethora of life insurance products for your consideration. Each has its own specific pros and cons so carefully consider all your options before making a final decision.
Term Life Insurance
This is the type of insurance that honest, well intentioned financial planners typically recommend. In addition to being one of the most affordable insurance options is also provides the greatest degree of certainty with respects to death benefits.
Joint Life Insurance
This type of insurance covers more than one individual; generally a husband and wife. Typically joint policies can be obtained for slightly less than the cost of two separate term life insurance policies; particularly when the male has higher than normal health risks.
Whole Life Insurance
I like to refer to whole life insurance as a bad savings account with an insurance component. It provides an immediate death benefit while also providing an increasing cash surrender value which theoretically increases in value as the policy matures. Broker commissions generally erode the value of these policies during the first few years so cashing them out early is never a good option.
Regardless of what type of insurance policy you ultimately choose one major decision that you need to make is how much insurance you actually need. Many financial planners recommend obtaining coverage that is equal to six to ten times your annual salary. This, of course, depends on whether or not you have children or if your spouse has a reliable source of income other than you!
Deciding what type of life insurance, and how much coverage you need, is a personal decision that is dependent upon your specific circumstances. That being said, it is extremely important that you protect your family from financial hardships should you pass away or become permanently disable.