Purchasing life insurance is something most adults with children know they need to do. However, making the purchase does not always happen. Or maybe the purchase is made, but the individual made it without an in-depth assessment of how much is really needed or without being provided the full range of available options.
Buying life insurance requires a person to consider his or her own death. The payout an individual is evaluating and investing in only occurs if the unthinkable happens—he or she dies. If the person is exploring term life insurance, then the death has to occur within the time the life insurance is in effect, which is within the foreseeable future for the insured. No wonder purchasing life insurance is a task that often finds its way to the bottom of people’s to do lists.
Tackling the task of choosing life insurance does not have to be onerous. Early exploratory steps include
- Examining options offered by your employer
- Asking friends about their life insurance
- Searching the internet
- Asking the insurance agent for your home or auto insurance if their company provides life insurance
- Finding out whether any organizations with which you are affiliated offer life insurance (professional organizations, credit unions, or even your warehouse club)
- Talking to your financial advisor
- Contacting a life insurance claim attorney
Another important step in purchasing life insurance is calculating how much life insurance will be adequate to support your dependents after your death. You also need to know how much life insurance an insurer will allow you to purchase. There may be a range or a limit related to your current income or your profession.
Many insurance company and financial education websites provide online calculators to help you figure out how much life insurance you should purchase to meet your family’s financial goals. An insurance agent can also walk you through the process in person or over the phone. The information that will be considered in the calculation includes:
- How many children you have
- Your children’s ages
- How many years any dependents will need financial support
- Whether you will pay for private school or college for your children
- How much you expect to pay for each child’s education
- Whether you anticipate any large non-recurring expenses (such as paying off a mortgage, paying for a wedding, paying for a car)
- How far in the future those special expenses will occur
- What liquid financial resources are currently available
- What funeral/burial/cremation expenses you anticipate
All these anticipated future expenses are combined to reach a dollar amount that should be enough to pay for them. Because the future cannot be predicted, some adjustment of the figure, in coordination with a financial advisor, may be desired to make sure there is a cushion for unforeseen expenses or emergencies.
Once you determine a policy amount that will adequately provide for your family and allow your financial goals to be achieved, a final step is finding a policy that is within your budget and offers the provisions and protections you want for your family.
Attorney Chad G. Boonswang helps families assess their financial needs, identify appropriate life insurance options, and obtain payment in the event of a death. Contact him today for a free consultation.