Normally life insurance isn’t an enjoyable topic to discuss. It can seem unnecessary, complicated, or even uncomfortable. But to ensure the financial security of your loved ones in the event of a tragedy, life insurance should not be avoided. With the new year, you can make an impactful and beneficial resolution to purchase life insurance. There is no better feeling than knowing that your loved ones will be taken care of. Thankfully, it is not too hard to begin exploring your options and determining how much coverage your family would need.

Americans are seriously lacking in coverage or are undercovered

According to the insurance industry group LIMRA, 86% say they haven’t bought insurance because it’s too expensive, but they overestimate the cost by more than double. This is unfortunate because anyone with financially dependent family members should have life insurance.

It is important to strive for an individual life insurance policy, independent of your job. These policies often don’t meet the needs of families. They are also dependent on working for that employer. In a survey by LIMRA, most consumers said they were not financially prepared for the death of a family member.

The question now is how to ensure the financial well-being of your family? Firstly, you need to consider whether term life insurance or permanent life insurance is appropriate.

Term life insurance guarantees coverage for a specified period of time

If you were to die during the term, your dependents would be paid the agreed upon benefit. Consider term insurance if you wish to safeguard your family only for a certain amount of time. This is useful if you wish to cover your children until they come of age, or if you have large expenses that will end on a certain date like a mortgage. This type of life insurance is generally more affordable.

Permanent life insurance is expensive but can help long-term dependents

Permanent life insurance comes in two different forms – universal life insurance and whole life insurance. Permanent life insurance provides lifelong protection. Many of these plans also accumulate cash value. Because you will pay for it throughout your life, it is considerably more costly. But, it can be worth it if you are worried about your spouse or dependent who has permanent special needs. Permanent life insurance can help ease the anxiety about the long-term care of these loved ones.

Determining the type of life insurance that you need depends on your unique circumstances and financial goals. A combination of term and permanent life insurance is often the right combination. It is important to meet with an insurance professional that can assess your needs and understand your goals.

Once you figure out the type of life insurance that is needed, you can determine the amount of life insurance that is right for you

Generally, you should calculate the total of all financial obligations. From that, subtract liquid assets to find out how much coverage you should obtain.

When considering your obligations, add up your annual salary, multiplied by the number of years you wish to replace that income. Additionally, consider the cost of a funeral, potential medical bills, all debts, the education of your children, and the replacement for any household services you may provide.

Liquid assets are any savings, college funds, or existing life insurance policies that you may have.

Talk with your family

Of course, when evaluating your life insurance needs, a holistic perspective towards your family’s present and future financial status must be utilized. Keep an honest and open dialogue with your family. Discuss with your children about their expectations for higher education, like whether they intend to pursue it, or what kind of college they’d attend. Talk with your partner about what kind of coverage they would like to have. They may predict a significant change in their income.

In the end, it is best to be safe and overinsure your family. That cushion can give them flexibility and more options. Although it may be a hard topic for you to think about, the first step toward getting life insurance is as easy as calling a Yetter Insurance agent. We’ll help you select a plan that is right for you and your family.