Help! What Kind of Life Insurance Do I Need?

By James O'Neal

Trying to decide what kind of life insurance you need is a test in and of itself. Nobody wants to talk about life insurance. For one, it’s boring, let’s get that out there, for another, it means facing your mortality.

But don’t worry, we’re here to help.

While deciding what type of life insurance you need may not be your idea of a fun day, it’s an important process. Accidents happen, age creeps up on you, or you may suddenly find yourself ill.

Don’t let your fear of an uncomfortable topic put stress on you or your family during an already stressful time. Let’s face the Grim Reaper together and make a plan!

Why Life Insurance is Important

We know what the normal reaction is: ‘well heck, I’m not dying anytime soon, this is too complicated.’ Let me introduce you to my friend Fate.

Yes, this is complicated, but that’s why you work with a professional to make the process simple. Don’t be scared; we’ll show you how important having the best life insurance policy can be.

Family

You may want to find the best life insurance policy is for the sake of your family. Over 80% of people believe that being married and having a child or children is the best reason for a policy. Next in line are those with a child or sibling with special needs.

You work hard for your family, you want to provide for them, and their needs don’t stop at your death. Especially if your death is unexpected. It’s important that the special people in your life have the means to not only survive but live as they have been.

Death is a huge event for those left behind, by taking a life insurance policy you’re able to create a safety net.

Most commonly a term life plan is used in this case. Applying to relatively young, family driven, people who are worried about the loss of their income when they depart.

Burial Cost

Do you ever think about your funeral? Beyond whether or not Aunt Linda will fall down wailing or what the turnout might be there are practical aspects to take into account.

The cost of a traditional funeral can easily reach $10,000.

Funeral flowers, a grave site, and of course the casket itself are all costs to consider. If you want your body to be cremated, you’ll still have fees associated with the viewing and other services.

We know, you don’t want to think about this, and neither does your family. Any kind of life insurance can help create peace of mind that there won’t be scrambling, price checks, or panic when grieving should be the only concern.

Life insurance is a perfect way to make sure nobody is left footing an uncomfortable bill.

Taxes

There’s no escape; they can still tax you when you’re dead.

You may be concerned with the estate tax, which is a tax applied to the transfer of your property when you die. As your will is enacted the fair market value of your gifts, property and insurance can all be taxed. The right kind of life insurance can help meet these costs.

In some cases this tax can also be collected at the state level, so be prepared.

Your family will also have to file your final income tax. Even if you died in that past year, you will still owe this final amount or, more to the point, those you leave behind will.

Two Kinds of Life Insurance

Life insurance comes in two main forms, term, and permanent life insurance.

Don’t fall for common misconceptions about these life insurance options; it’s time to learn the facts.

Term Life Insurance

Considered the simplest form of life insurance, term life insurance pays only if a death occurs during the term of the policy. Handy name, that!

Usually, these plans won’t provide any other sorts of benefits, and their policy range (the term) can last from one to thirty years. What this term can mean for you depends on the type of policy you have.

There are two main types of term life insurance.

  • A level term policy has the same death benefit no matter when a person passes away, as long as it’s within the time frame of the policy.
  • A decreasing term policy has a death benefit that drops, usually each year, during the policy’s term.

Term life insurance is extremely popular as it’s low cost. It also has the benefit of being able to be extended or converted to whole life insurance if need be.

If you are the family breadwinner, the homeowner with a mortgage, or have debt that will be left behind, term life insurance may be the choice for you.

Permanent Life Insurance

Covering a couple of different types of insurance, such as whole life insurance, permanent life insurance covers any policy that does not expire. Like term life insurance, there are two main types.

  • Whole life insurance offers steady premiums as well as a cash value accumulation.
  • Universal life insurance has flexibility in the premium payments along with death benefits and the same cash savings.

As long as your premiums are paid, a permanent life insurance policy will provide lifetime coverage.

Being composed of two parts, the investment and the insurance leads to prices being rather high. Your insurance company invests a portion of your premium, and that interest builds up the cash value.

This cash value can be useful as it is possible to borrow against it once you’ve saved a fair amount.

Using this kind of life insurance can be more complicated, but may be well suited for you. If you have a high net worth, want to provide an inheritance, or have a maxed out retirement plan this could be the perfect choice for you.

Need More Help?

At O’Neal Insurance we’re always here for you. Contact us today, and we’ll help you find the right kind of life insurance you need.

If you’re also interested in other types of protection, visit our blog to read more!