SAN ANTONIO, Texas — You never see the benefit, but life insurance is likely to give you peace of mind while you live and your loved ones financial support after you die.
“Life insurance is for that unexpected situation and we have lived with the unpredictable and unexpected for two years now,” said Amy Danise of Forbes Advisor.
You most likely need life insurance if you have anyone relying on your income.
“Whether it’s a spouse, whether it’s children, extended family members, think about what the situation would be that they’re in if your income was no longer there,” said Jay Kirkwood, a financial planner with Secure Financial Management in San Antonio. “We really use it as a tool to make sure we’re protecting the ones that we love.”
You may already have life insurance through your job known as group life insurance, but it may not be enough.
“That tends to always be inadequate,” Danise said. “It’s definitely inadequate if you have a young family. While group life insurance comes at a great rate or may even be free at your workplace, definitely look into your own life insurance. If you leave a job, you don’t want to lose your life insurance, which is what happens if you have only group life. You want a policy that goes with you no matter where you go.”
There are many options, but the two main choices are temporary and permanent known as term and whole life insurance. Term life insurance is more affordable.
“It’s for a term of time, a period of time be it 10 years, 20 years, 30 years,” Kirkwood said. “It will help protect you for periods in your life. Maybe when you’re trying to make sure your children are taken care of.”
“Term life insurance is the most affordable type of life insurance because it’s purely insurance, so it’s a great choice for people who want insurance for a specific time period, for instance, the years until you retire, where you might want income replacement for your family if you unexpectedly passed away so you can ensure those years and know your family is provided for,” Danise said.
Whole life insurance offers coverage for your lifetime.
“Whole life insurance is good for people who want to secure life insurance coverage no matter when they pass away,” Danise said. “If you’re looking to definitely have a death benefit for beneficiaries to pay for your funeral, for example.”
How much life insurance is needed varies, but a general rule is:
“Start looking at eight to 10 times your income,” Kirkwood said.
To get a more specific number, you will need to do a bit more math:
“Add up what you want to protect, whether it’s your working years, the balance of your mortgage, maybe you want to protect the years until your children have graduated college,” Danise said. “Add those costs and then subtract the assets your family has, if they could use, for example, existing life insurance or savings they could draw from if you weren’t around anymore. Then what you have would be your life insurance need.”
The best time to buy life insurance is as soon as you know you need it. The younger and healthier you are, the less expensive it is.
“Buy it before you get a year older when rates will go up, before you develop health conditions before rates go up,” Danise said.
Quotes are free and there are many online life insurance calculators, so shop around for the best rate.
If you have a question for Eyewitness Wants To Know, email us at EWTK@Kens5.com or call us at 210-377-8647.