What To Look For In Life Insurance Cover
Determining the appropriate life insurance cover for a given policy requires a great deal of concentration. It’s easy to pick a number and assume that when you die, your beneficiaries will find their needs are safely met. While the ‘pick a number’ option may be taken by more people than you might think, it might be safer to ensure the financial needs of your family are catered to.
It’s Easy To Underestimate – Estimating the amount of life insurance cover to apply for is not too much different than calculating how much money you should have in savings and investments when you retire. That amount is almost always underestimated, even when inflation is taken into account. Speaking of inflation, what is a $100,000 policy going to be worth 20 or 25 years from now? While it’s always possible to purchase too much life insurance, we have a tendency to purchase too little, policies that won’t give our beneficiaries the financial support they might need.
There are a number of things that should be taken into account when estimating how much life insurance cover you need. A few examples are listed below.
- The impact of inflation. What will the policy be worth in 15, 20, or 25 years?
- Do I want college or university expenses for my children to be taken care of?
- Will there be enough money to make mortgage payments, or pay off the mortgage on the house?
- Do I expect my spouse to go to work if he/she is not doing so? Will training or childcare be needed?
The above isn’t by any means a comprehensive list. It’s just food for thought. When you think about it, the purpose of insurance is to cover catastrophic events – death certainly qualifies – and to cover enormous expenses. Under this lamp, the insurance premium you are asked to pay is a real bargain should catastrophe strike. Knowing that the life insurance cover in your policy will provide your beneficiaries with food, shelter, education, and generally a decent life gives you peace of mind, and gives your family peace of mind as well.
Get Financial Advice Before You Buy – Rather than simply shopping for a policy, it’s usually better to consult with a financial adviser to get an accurate picture of what your life insurance cover should really be. Another thing to take into account is over time; your life insurance needs are likely to change. As you grow older, the amount of life insurance cover you should have might decrease. You may even reach a point in your life where a life insurance policy, at least a large one, no longer makes sense. Once you’ve purchased a policy, you’ll want to review it periodically. You won’t need to review the policy annually. Every 5 years or so may be sufficient, or whenever major changes in your life occur.
We’ll be happy to give you a free quote for the cover you need, and we also stand ready to assist you in determining what the value of your policy should be, given your unique circumstances.