Low Cost Life Insurance - The Basics

Life insurance provides future financial stability for your family, helping to ensure that when you die, your dependents will have the financial resources needed to preserve their lifestyle and security.

How much Life Insurance Coverage Do I Need?

The determination of how much Life Insurance Coverage is needed depends on several components:

• Immediate financial needs at the time of death, such as final illness expense, burial costs and estate taxes.

• Funds for ongoing financial needs, such as monthly bills and expenses, daycare costs, college tuition or retirement.

• Specific expenditures, such as moving costs or to provide time for family members to obtain employment.

Careful assessment of the above components is necessary to determine the level of coverage required. However, one common rule of thumb is a coverage limit from seven to 10 times your annual gross income, taking into account any liquid financial assets available to your family at the time of loss. In addition, it is important to remember that the proceeds from life insurance are tax-free.

Life insurance can play an important part in estate planning, retirement funding, and the transfer of wealth to your beneficiaries.

Types of Life Insurance

Term life insurance provides protection for a defined period of time and pays benefits only if you die within the specified term. Term life insurance does not accumulate cash value, but the insured is commonly given the option of conversion to a permanent policy within a pre-determined period. One essential benefit to term life insurance is that you may purchase much more coverage for the same premium dollar than you could with a permanent, or cash-value-building plan. For many people, it is the only way to afford the level of protection necessary for family security. 

Whole, universal or variable life insurance are cash value products. They provide a cash value accumulation as well as protection. In addition, premiums remain constant throughout the lifetime of the policyholder, and can accumulate on a tax-deferred basis, allowing the opportunity to withdraw or borrow cash value accumulations. However, premiums for permanent coverage options are substantially higher than those of non-cash value products, often limiting the purchase of an adequate amount of coverage for family security.

At Insurance Direct^®, we can help assess your needs and financial objectives to determine not only the coverage amount, but the type of coverage that is optimal for your particular needs and requirements.