If you’re like most people, you understand the problem with having too little insurance. It leaves your family open to financial hardship. But what about having too much insurance, or the wrong kind of insurance? When it comes to protecting your family, it’s important to have the right amount, and the right type, of insurance in place so you are paying only for the protection you really need.
Imagine for a minute that your income were to suddenly disappear. Would your family be able to continue to pay the mortgage? Save for post-secondary education? Put a little something away for retirement? If your family counts on your income then you need insurance for their financial security. It’s just that simple. What type of insurance you need and for how long you need it is where your personal situation plays a role.
There are two basic types of life insurance…term and permanent. Term insurance provides protection for a specific amount of time…or the “term” of the policy. This is usually 10, 20 or 30 years. Permanent insurance, such as
universal life, provides coverage for life and has an investment component to it. Both of these types of life insurance can be customized to your specific needs with riders or other protection products, such as critical illness.
Most people have both short term specific needs for insurance protection – for example, to cover a mortgage, as well as a permanent need to pay for final expenses and to pass a little something on to a surviving spouse or children. This is where the concept of layering, or personalizing your protection, can help to make your coverage affordable.
When you are young and starting out, your need for protection may be greater than when you are nearing retirement. As your life progresses and you pay off your mortgage, your children complete their education and most of your income-earning years are behind you, your need for insurance will decrease. With less to protect, you should be paying for less protection.
There’s a fun and easy way to get a good understanding of your personal insurance needs and it’s called My Insurance View. My Insurance View from ivari asks the right questions to uncover how much insurance you need and for how long you need it.
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