When looking for a life insurance policy, it’s important to consider the purpose of your policy. Life insurance is created to provide compensation to loved ones once the insured is gone, but everyone is different—as are their life insurance needs.
The most common life insurance policies are term life and whole life.
Term Life Insurance vs Whole Life Insurance
A whole life insurance policy is just as it sounds: this is a policy that lasts as long as the insured lives, and only pays out benefits once the insured passes away.
Term life insurance policies are a bit more complicated. These policies only last for a certain amount of time as set by the insured and agreed upon by the insurance company. Term life policies typically go by 10- or 5-year increments, primarily 10, 20 or 30 years. For example, you can purchase a 10-year policy so that you are covered until your children have graduated college. Or, if you’re still in college, you can purchase a life insurance policy to last until you graduate.
Deciding how long you should carry life insurance depends. There is no right or wrong answer, as every life and situation is different. Life insurance is intended to provide for loved ones once you pass. If no one will suffer a large financial burden with your passing, you may no longer need a life insurance policy. Even then, you may choose to continue carrying a life insurance policy in order to provide a few last benefits to your loved ones after you die.
Do I Need Life Insurance After Retiring?
Usually, your children and spouse will be comfortable by the time you retire. You may not need to maintain a life insurance policy in this case. This, of course, depends on several different factors. If you still have loans to pay off, it may be difficult for your loved ones to bear the sudden cost of loans after you pass away. It also depends on where your family is in their lives.
Consider who will be named as beneficiaries and how steady (or unsteady) they are. If you believe that your death will leave behind a heavy—and costly—burden on your loved one’s shoulders, you may want to maintain your policy.
Be sure to consult with an insurance agent, a financial adviser and your loved ones.
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