September is Life Insurance Awareness Month, a campaign sponsored by industry leaders to educate consumers on the importance of life insurance as a part of financial planning. Life insurance is a relatively small monthly cost that provides financial security for those who rely on your income, such as your spouse or children.
Over a third (36%) of Americans plan to purchase life insurance this year, including nearly half (48%) of millennials, recent LIMRA research shows. But while many people plan on getting life insurance, some may not know how to begin the process. Here’s how to get started:
- Determine how much coverage you need
Your life insurance payout, or death benefit, should be large enough to replace your income while your dependents deal with the aftermath of your passing. Ideally, the death benefit will help pay for your funeral expenses and outstanding debts, as well as cover living expenses for a set period of time.
The amount of coverage you need depends on how much money you make, how much debt you owe (such as a mortgage or student loans), how many dependents you support, and any other financial obligations you may have. Typically, your life insurance payout will need to be 10 to 15 times your annual income.
- Choose between term and whole life insurance
There are two basic types of life insurance, term and whole. Term life insurance is the traditional type of insurance in which you pay a monthly premium for a set period of time, typically 10-30 years. If you die before the term expires, your beneficiaries receive a payout. The average term life insurance premium for a healthy, young policyholder is about $25 to $35 per month.
Whole life insurance, on the other hand, doesn’t have a set expiration date. It lasts the entire duration of a policyholder’s life and has a guaranteed cash value, making it a more expensive insurance option. Whole life insurance premiums can cost anywhere from $300 to $3,000 or more per month, depending on the policy size and age of the policyholder.
- Shop around with multiple insurance companies
Life insurance companies have criteria when determining who is eligible for a policy and how much that policy costs. Because premiums can vary from company to company, it’s important to compare plans across multiple life insurers.
If you need to review your life insurance, whether you have a family to think of, or you are an “empty nester”, give AIC Insurance a call at (509)-764-4447. We can help you determine if you need life insurance, and if so, an appropriate amount, type, and term. Give AIC a call today at (509)-764-4447. AIC Insurance, serving the Columbia Basin and the Pacific Northwest.
