There’s one thing at the heart of every smart financial plan: life insurance.
Though planning for the uncertainties that life can bring might be emotional and overwhelming, understanding how much coverage you need is a humane process. It’s all about human life value.
Human life value is a core principle of life insurance coverage, and it helps you determine how much coverage you need to ensure that your family has what you want or wish to provide for them. This formula multiplies your income by the years you have remaining until retirement. The sum reflects the amount of coverage you’d need to find in a life insurance policy that could provide your loved ones with the support they need should the unexpected happen.
As an alternative to calculating this figure, you might also assess your family’s needs and use that to determine the amount of coverage you’re seeking. For many people, this comes to about seven to 10 times your annual income. In addition to replacing income lost through death, life insurance can also help settle any debts you might have, including mortgages and loans.
To meet your coverage needs affordably, you can work with a financial advisor to build a plan that includes both permanent and term insurance. Permanent life insurance is what it sounds like — once you enroll in a permanent policy, as long as you continue to pay your premiums, the policy is in force for life. The policy builds cash value over the course of your lifetime and could pay benefits while you’re alive, helping you accumulate cash for future savings goals such as education, retirement or funds for emergencies.
Term life insurance offers coverage for a specific number of years. These policies tend to be more affordable initially and can help you fill the gap of your needs above your permanent life insurance policy. Many plans also allow you to change or convert the term policy into a permanent policy during the original term period.
Life insurance can reduce the risks that prevent your financial plan from coming to fruition. By combining the right amount of permanent and term life insurance coverage, you can protect your family and loved ones against the unforeseen circumstances or risks in life.
To learn more about these types of life insurance and how MTA Benefits can help you, contact Tom Colbert of Vista Financial Group, at 888-646-1972, ext. 104, or by email at tom@vistafg.com.
