Buying the right life insurance policy is like buying money. When we are young, in good health, and haven’t picked up too many ‘bad habits’, life insurance is incredibly affordable. If you are in your 20’s or 30’s, I cannot stress enough how important it is that you put a good policy in place.
As we age and begin to develop common health concerns, insurance premiums can become quite expensive. Most of us find ourselves ill prepared to understand these ideas until we are older and then, we begin to think that insurance is “out of reach” or a “bad investment”.
Sometimes, when we see an insurance quote in the $100 to $300 per month range, we want to think about what life might look like if we just invested that same money in to savings. The reality is that most of us won’t actually set that money aside, but we use this logic to somehow rationalize not getting a life insurance policy. So, we don’t buy the policy. And, in most cases, we don’t set the monthly premium amount aside.
Then, the very reason we need insurance confronts us. We get diagnosed with a critical illness, a terminal illness, or even worse … we die. For far too many people, this is the reality. Far too many homes are lost because the sole income provider or major bread winner of the family passes and the survivors are simply not able to keep up with everything.
Buying the right life insurance is a matter of making sure you select the policy that best covers the needs of your loved ones if you become sick, get injured, or die.
The smart way to think of life insurance is that you are using that money to protect your most valuable asset: Your ability to produce income.
So, let’s say you allowed time to go by before buying the right life insurance. Now, you are in your 50’s, your 60’s, or even your 70’s. You can still get coverage but premiums can be anywhere from $100 to $400+, depending on a number of factors. To do some simple math, let’s look at a policy for $250,000 that has a premium of $300 per month and is a 20 year term. This means you will be paying $300 per month over the next 20 years if you do not pass away first.
$300 per month comes to $3,600 annually.
$3,600 times 20 years means you would have spent $72,000 over the 20 years if you don’t pass.
At first glance, someone may look at these numbers and instantly think life insurance is too expensive, “a bad investment”, or a waste of money.
This is why buying the right life insurance makes a big difference. For example, If you select a plan that includes a Return Of Premium option, and you outlive the policy, your premium is returned to you. At worst, this is a “no lose” scenario where you get your premium returned.
The real purpose of your policy is, of course, to protect your loved ones in case you get sick or die. If you die within the first year, 2 years, 5 years, or even 19 years, your beneficiary would receive the full $250,000. Financially, that’s a strong win for your loved ones.
What if you become critically ill while your policy is in place? In most cases, the type of life insurance most of us are familiar with doesn’t help. You’re still alive. But since you’re not able to work, you have no income, and you could lose your home. Buying the right life insurance that includes Living Benefits could begin paying you up to 30% of the full benefit amount while you are unable to work during that first year.
That $300 per month in insurance premium bought you income for when you are injured or ill and provides financial resources for your family if you die.
Buying the right life insurance is an important decision. Reach out to us and let us help you find the right coverage with the right carrier at the right price.
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