What would happen to your family if you were to pass away unexpectedly? Would your loss leave a financial burden, or have you taken the steps necessary to assure your dependents would be taken care of for years to come? Life insurance provides peace of mind for you and your loved ones, knowing that a sudden loss would not be further complicated by financial woes.
No one knows what tomorrow may hold. If you have not yet purchased life insurance, there is no better time than now to do it. That’s because life insurance premiums are generally calculated based on your age and health. On average, younger and healthier people enjoy the lowest premiums, although Scott Hopson and our team can also find competitive rates for people at more advanced stages of life.
You can use life insurance benefits for a wide range of expenses. In fact, some permanent policies go beyond death benefits to provide wealth-building tools and financial advantages for today. Although you can determine how your coverage will be used, many policy-holders purchase coverage to fund:
- Funeral services
- Burial or cremation
- Medical bill payoff
- Income replacement
- Debt payoff
- Maid, lawn care, and replacement of other household maintenance services
- Replacement of childcare services
- A child’s college tuition
- A spouse’s retirement
- A legacy donation to a favorite charity
- The start of a new charitable fund
- An inheritance for heirs
- Protection of financial interest in a business
- And more
Types of Life Insurance Coverage
When you purchase life insurance, you will be presented with two different options: term life and permanent life coverage. While there are many different types of life insurance coverage, all policies can generally be sorted into one of these two categories. Each is designed to serve a different purpose. Depending on your stage of life and long-term goals for coverage, you may find that only one or both coverage types are right for you.
Term Life Insurance
Term life insurance is designed to provide high death benefits for a specified term, after which time the policy expires. You can select a policy term that fits your needs – often between 10 and 30 years. Since term life insurance is most often used for income replacement, we suggest term life coverage during the phase of life when other people, such as children or a spouse, are relying on your income to pay monthly expenses and save for the future.
Often, policy-holders purchase enough term life insurance to provide security until children become financially independent or the mortgage is paid in full. Others prefer the security of guaranteed income replacement until retirement, when it is possible to rely on financial reserves and other sources for income.
Permanent Life Insurance
Permanent life insurance does not expire. Instead, it provides ongoing benefits to age 100 and beyond so long as you keep your premiums paid up according to the terms of your policy. There are different types of life insurance that fall under the ‘permanent life insurance’ umbrella. For example, whole life insurance offers level premiums and coverage for life. Universal life, on the other hand, offers greater flexibility with a combination of lifelong coverage and the option to make certain changes to your policy over time. These types of policies often have an investment component, allowing you to accumulate and grow cash value in them over time.
How Much Life Insurance Do You Need?
So which types and how much coverage do you really need to protect your family? The answer is different for everyone. Guessing could leave your loved ones severely under-insured and far short of the funds they need to avoid drastic lifestyle changes. That is why you should work closely with an independent agent to calculate your family’s unique coverage needs based on things like:
- Your debts
- Your income
- Your household responsibilities
- The number of dependents you have
- The future expenses you are saving for
- Your goals for wealth generation
- The number of years until retirement
- And more
Private Life Insurance vs. Group Coverage
Keep in mind that not all life insurance policies are created equally. With a private insurance policy, such as the one you can purchase through the Scott Hopson Agency, you get customized coverage tailored to meet your needs. With group life insurance policies, such as the coverage that may be available to you from work, you get generic coverage designed to meet the needs of an entire group of people. It usually comes with low limits worth about two to three times your annual income. Not to mention, you have little control over the coverage amount or the terms of the policy. Furthermore, if you decide to change jobs, you may also lose your coverage, forcing you into the private market at a later age or after changes in health have driven up the cost of your premiums.
That is why we recommend purchasing private life insurance. You get to choose the type of coverage and amount of protection that is right for your family. Best of all, the policy stays with you regardless of job loss or other life changes that could otherwise affect your ability to keep group coverage.
Why Use an Independent Agent?
If you are in the market for life insurance, be sure to use the services of an independent agent. Unlike captive agents, who only work for single insurers, an independent agent can quote coverage from many different insurers, opening up a greater selection of policies to choose from.
Scott Hopson is an independent Colorado life insurance agent. When you choose him, you are choosing to work with someone who can help you compare rates and calculate the amount of coverage that is right for you. For more information about Colorado life insurance options or to request your free quotes, contact our office today.