Life Insurance: Common Questions

Do I Need Life Insurance?

Life insurance is a necessity if you have loved ones that depend on your income, especially if you have debt and/or have very little in savings. Your family's financial future could be at risk without the protections that life insurance can provide. Life insurance gives your family the ability to replace your income.

Even if you're single with no children, it still makes sense to have a life insurance policy if you have debt and/or not enough savings to cover burial costs and final expenses.

If you are in business with a partner, you also may need life insurance as part of a buy/sell agreement.

How Much Life Insurance Coverage Should I Have?

Many experts recommend carrying at least 10 times your income in life insurance depending on your situation. The amount should be enough to replace your income and ensure that your loved ones have the ability to maintain their financial lifestyles.

In the case of business, you need enough life insurance to buy out your partner's business interest.

How Long Should I Have Coverage?

Experts recommend between 15 and 30 years depending on your age. You want to make sure you have enough coverage until you can retire debt, build retirement savings, and eventually eliminate the need for life insurance. The younger you are, the longer you will probably need life insurance.

How Do I Choose Between Term and Whole Life?

Term life insurance provides coverage for a specific period of time - typically 10, 20, or 30 years. It is the least expensive but ends at a specific time. If you pass within the term, your beneficiaries receive a death benefit. This policy has no cash value.

Whole life insurance can give you lifelong coverage. The premium remains the same throughout your life. The death benefit is guaranteed as long as the premium is paid. It also provides a cash value, which grows over time. If needed, you may borrow money against this cash value. However, whole life insurance typically costs more than term life insurance.

What is Return of Premium Term Life Insurance?

With a return of premium term life policy, you have the same life insurance coverage as a term policy. When the term of the policy is up and you are (thankfully) still alive, you can have your premiums returned to you, excluding rider and substandard premiums. You also have the option to exchange those premiums to a permanent paid-up policy at that time.

For more information regarding life insurance, call Mark Chilson at 715-672-2422 or email him at mchilson@sfbank.com.

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