Who Needs Life Insurance?

Anyone who has children should also have life insurance. Life insurance is one way to guarantee your family’s financial security, provide for your children’s education, help them continue to build your business or even help them pay for things like cars and mortgages. Think of life insurance as another way to invest in your family’s future.

There are generally three types of policies to look for and different considerations with each one.

• Universal Life Insurance: A flexible policy that you can structure around your needs and your monthly income. You can adjust the premiums paid per month if your income varies over time. You just have to ensure that you pay enough to keep the policy valid and in effect. There may be a death benefit option that can either increase or reduce the death benefit as needed. This is especially useful if you have young children and want certain levels for lengthy periods of time, but then want to be able to reduce the benefit when your children are grown.
• Term Life Insurance: This kind of policy will maintain a certain premium for a distinct time period, after which you can opt to continue coverage with a premium that increases annually. You might decide that you want life insurance for 15 years with guarantees that your premiums will remain fixed. If you have a fixed budget, this might be especially useful.
• Whole Life Insurance: This offers a guarantee on the death benefit and guaranteed cash value for a guaranteed premium. This is often most expensive kind of life insurance, but may pay dividends (refunds of unneeded premium) that can be used in a variety of ways: to increase the death benefit, to borrow against for any use or to keep the policy in effect so that you can stop paying monthly premiums. Cash values can function as additional investments or assets.

Paying for Life Insurance

Knowing how much you can afford to pay on a monthly basis means having a solid understanding of both your expenses (monthly bills, child care, mortgage, other insurance, food, healthcare, travel, entertainment) and available assets (investments, savings, additional income that can be counted on). It’s useful to look at all your expenses and determine where you could save a few dollars each month. Just cutting down on a latte here or a dinner out there can add up to significant savings. Genworth Financial offers a free budget calculator to help you limit expenses to cover the costs of life insurance.