If there is one solid piece of investment advice that should be given out, is to always prepare for the future. If you haven’t considered life insurance – then you should start doing so right now.
If there is one solid piece of investment advice that should be given out, is to always prepare for the future. If you haven’t considered life insurance – then you should start doing so right now. Hopefully, you’ll still be around for many years to come and you will be able to care for and provide for your family. However, should worst come to the worst and you pass away or become too ill to provide for them – life insurance will ensure that they don’t become destitute.
NerdWallet advises the following: “Depending on your individual needs, you should buy enough insurance to cover your debt, including any loans, mortgages, credit cards and more. You’ll also want a big enough benefit to provide an income replacement for your dependents. If you have any set financial goals for your family, such as college tuition or a wedding fund, you may want to add them to your coverage amount. Finally, you’ll want to include the cost of your death including funeral, burial, probate costs and any special arrangements.”
What are your options?
The first place to start is to compare the options that you have. There are generally two kinds of life insurance: term insurance and whole life insurance.
- Term Insurance: Term insurance is life insurance that is valid for a certain amount of time, say 10, 20 or 50 years. They are usually cheaper than whole life insurance policies, but should your term run out you will leave with nothing. In the event of your death under the policy time frame – your family will be supported. A good idea is to choose a policy for the amount of time left until your children become financially independent.
- Whole Life Insurance: Whole life insurance is exactly that – insurance that covers your whole life and not just a number of years. Because there is a guaranteed payout – these are usually a bit more expensive than term insurance policies.
Joint life policy vs single life policy
Many people make the mistaken assumption that just the main breadwinner of the household should be covered by life insurance, but the truth is that the death of a stay-at-home parent could also have huge financial repercussions, so our next piece of investment advice is to get a joint life policy that covers both of you.
Consider the following factors when you are thinking about moving to a joint life policy:
- Affordability: It’s often cheaper to have a joint life policy.
- Cover needs: Your spouse or partner might not need the same level of cover as you do, in which case taking out two separate policies might make more sense.
- Death in service: If your partner has a work policy that covers them then they may not need insurance.
- Health: If your partner has health problems this could make your policy more expensive.
If you are a new parent and are thinking about how to secure your financial future so that your child gets the very best in life, then we advise that you read our new guide New Parent’s Guide to Finance.
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