Mike’s Life Insurance Advice

Hi Roger,

Most people get life insurance when they want to make sure that their loved ones are well taken care of if something happens to them. For example, if you have young children an insurance policy will be able to make sure there’s a roof over their heads and pay for their education if you should pass away unexpectedly.

Life insurance can also be used to take care of your debts and mortgage as well as your funeral expenses. A life insurance policy can make sure that your family will not have to worry about paying for your final expenses or where their next meal will come from if you die. They will be better able to deal with the grieving process and hopefully it will make it a bit easier for them to move on with their lives.

Term Life Insurance Advice – How to Get Life Insurance on a Budget

As you mentioned, life insurance policies can be quite expensive. The annual premiums for a whole life policy are about ten times the premiums of a term life insurance policy that offers the same pay out to your beneficiaries.

Unlike a whole life policy a term life insurance policy does not build any cash value and you cannot borrow against it. You pay solely for the coverage it offers and that coverage is for a set amount of time. However, that’s exactly why the cost of term life insurance is a lot.

Realistically, most people need the coverage the most when their family is young. A term policy for five to thirty years may be exactly what you need.

How is the Cost Determined?

The primary factors that influence the cost of your insurance policy are your health and your age. If your health is poor or if you smoke you should anticipate paying more for your policy than if you are healthy. Also, the older you are the more you will pay for the same amount of cover.

But the biggest factor that determines your monthly premium is the amount of coverage you desire. As you mentioned, most experts recommend that you have enough coverage to take care of six to ten times your annual salary.

But if times are tough and if your budget dictates that you can only afford two or three times your yearly salary that is what you should get. Your family will be a lot better off with the equivalent of several years of income should you die than if they had no money coming in at all. You can always increase your coverage when you are on a more solid financial foundation.

Mike