It’s probably not on your calendar, but September is Life Insurance Awareness Month. It’s a good time to learn about the benefits of having life insurance and the dangers of not having it.
Confusion about the basic elements of life insurance might keep people from getting the protection they need. More than half of uninsured Americans say they have put off purchasing coverage because they don’t know what to buy or how much they need.
The confusion is understandable, but a delay in acquiring appropriate insurance can be costly. It’s generally more affordable to purchase when you’re younger. There are potentially greater costs involved in not having insurance when it’s needed. These costs are personal. What’s it worth to know your family could stay in your home if something happened to you, your children could continue their education plans, and your debts could be paid without burdening your family? If you assign these benefits a price tag, it would be high. That’s the value of owning sufficient life insurance.
How much is enough? You might hear that you need insurance equal to seven to 10 times your pretax annual salary as a ballpark figure, but not everyone is playing in the same ballpark. To get a true sense of how much death benefit you require, you’ll need to consider a variety of factors — your current income, spouse’s income, size of your mortgage, other liabilities, number of children, educational expenses and final expenses for funeral arrangements.
What type? There essentially are two basic types of life insurance: term and permanent. Term is designed to provide coverage for
a designated period and is quite affordable for most people, especially when they buy policies as young adults. Permanent insurance, such as whole life or universal life, usually is more expensive than term. Besides providing a death benefit, permanent insurance premiums build cash value, which you can access through loans or withdrawals, giving you additional flexibility, should your financial needs change over time. In choosing between term and permanent, evaluate several issues, such as how long you think you’ll need coverage and how much you can afford in premiums.
This article was written by Edward Jones for use by your local Edward Jones financial advisor. Edward Jones, member SIPC
– Roberto De Jesus is a financial advisor for the Edward Jones branch on Cedarcrest Road in Acworth.
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