Life insurance protection is necessary at any age. Although the needs will be different in middle age than when younger children are in the house, it is still very important to ensure financial stability.
Term vs. Whole Life Insurance
Whenever buying life insurance, the first question you need to answer is, “What kind—term or whole life?” Before talking to an agent, you will want to know the difference or have the agent explain it.Term insurance is pure insurance and has no other benefits. Coverage is purchased for a set number of years, such as one, five, 10, 20, or 30 years, and it is much cheaper to buy than whole life. Being inexpensive, it also means that you can get more coverage for less money, which makes it ideal for purchasing when you are younger.
The Premiums Are Based on Health
Life insurance premiums are based on two things—your age and your health. Buying smaller amounts of coverage—less than $50,000 (in some cases $100,000), a medical exam is usually not needed. More than that usually means a physical exam becomes necessary.When Buying Term Insurance, Consider Renewal Time
If you have a whole life insurance policy (also called permanent life), there is no need to worry about renewing it. It will stay in force as long as you keep paying the premiums.Check Convertibility
Term insurance policies often come with the option to convert to a whole life policy. Shelly Gigante at Mass Mutual warns that you need to read the fine print on this rider. There may be a limited time that you can make the conversion, or, she says, you may not be able to convert it to that company’s best products—making you pay considerably more.The Need for Coverage Is Less In the Middle Years
After your children have left home or are getting ready to, you do not need to have as much life insurance coverage. You likely still have a lot of bills—including a mortgage, credit card debt, medical bills, a car loan, business debt, possibly still paying for education, and more.When a death occurs of either the breadwinner or the spouse, there will be a sudden need for cash.
Calculate Your Need for Insurance
Most insurance companies and financial advisors such as Forbes suggest that you buy enough coverage to equal 10 or more times your annual income. Other needs or goals can be added to that amount, depending on what you want to do with it. The main goal should be to pay off all existing debt and to provide some income for the surviving spouse and family.Guaranteed Issue Life Insurance
If you already have some medical issues that might prevent you from getting a regular life insurance policy at a reasonable rate, you may want to get a guaranteed issue life insurance policy. Investopedia states that this type of whole life policy does not require any physical exam, but it offers limited coverage with higher than normal premiums.Special Riders
Insurance companies usually offer several kinds of riders, which are options that you can get when buying a policy. Riders will vary between states and companies, but you will want to know what is available. Some riders you may want include:- Waiver of premium rider. In case of disability, future premiums will be waived.
- Disability income insurance. If you become disabled, this kind of rider may provide some income. Oftentimes, the income will affect the value of your policy.
- Dividends. Some companies offer to pay dividends, but they are not guaranteed.
- Life insurance supplement rider. This rider provides a mix of whole life and term. It applies premiums and dividends to pay for the policy and it is designed for people with tight budgets.
Shop Around for the Best Rates
Premiums for life insurance and riders will vary considerably. Shopping around can help you find a good price, but compare policies by using the same value for both to determine the better deal.The Epoch Times Copyright © 2022 The views and opinions expressed are only those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.