Many of us will never have enough to completely cover potential long-term care or disability. But you may decide to check out long-term disability or long-term care insurance, which can cover those expenses without costing as much as a large term life insurance policy.
How much can you afford to pay for life insurance?
Perhaps the most important thing to consider when choosing term life insurance – or any type of life insurance – is what you can afford. If you stop making payments, for whatever reason, your coverage will lapse. So you need to make sure you can pay the monthly or annual premium, even if money gets tight in the future.
If you know you can’t afford the amount of coverage you need for a 30-year term, consider cutting back to a shorter term. This is an especially viable option if you’re still very young.
Let’s say you have your first child at 25, and you would like to have 25 years of life insurance coverage. (Based on your personal assumption that you’ll have another baby or two in the next few years.) Right now, you can’t afford a 25-year term policy, but you can afford a 10-year policy. Because you’ll still be relatively young at the end of the 10-year policy, you’ll most likely be able to renew your coverage for another 15 years, if necessary.
But be cautious. If you have a major health problem, start smoking or put on weight between now and the end of your shorter life insurance term, your premiums could skyrocket on your next policy. Or worse, you could be unable to get another life insurance term.
A wiser option could be buying the bare minimum of life insurance coverage for 25 years, then tacking on a second policy to increase your coverage when you have more wiggle room in your budget.
Do you need permanent life insurance?
In general, we here at DoughRoller believe term life insurance is best in most cases. It’s the most affordable option and usually the wisest choice. However, there are some instances in which you may need permanent or whole life insurance.
If you’ll never have enough in savings to retire or to cover your debts and funeral expenses, permanent life insurance could be a reasonable option. Also, if you’re providing for a child or another dependent who will never be able to live independently, permanent life insurance may be justified.
When choosing a term for your life insurance policy, there’s a lot to consider. With term insurance, don’t underestimate the importance of the length of the policy. Use the above questions to assess what’s best for you and your family. And to get quotes quickly and easily online, visit our life insurance page.
You can also check out PolicyGenius’ policy generator to figure out how long your life insurance policy should be based on your own personal life details. They won’t ask anything too personal, and you don’t have to share any of your contact information whatsoever. Give it a try!
Finally, if you have any questions or think other factors are important that are not listed above, leave a comment below.