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Life Insurance: Taking a Moment to Look at What You’re Leaving Behind (Q & A)

The future should be exciting, even though there are a lot of unknowns. Life Insurance helps you prepare for that uncertainty by protecting the people you hold closest. Since September is Life Insurance Awareness Month, it’s the perfect time to evaluate your existing policy or learn more about whether you need it.

Some people think of life insurance as something extra, something you don’t need. You and your family might actually get a lot out of life insurance coverage. It may help to take care of many of the costs you might leave behind after you die. They provide a variety of benefits and are available for nearly every life stage and income. Below, you’ll find answers to some of the most common questions people have about life insurance.

Q: Who needs life insurance?

A: If you have a family or hope to start one, the answer is you probably need life insurance. A life insurance policy helps protect and secure the financial future of your loved ones by providing funds to your designated beneficiaries. Funds can be used for income replacement, education expenses, funeral expenses and more. In addition to the primary earner, stay-at-home parents or part-time earners should consider a policy as well, since they provide valuable services that may be expensive to replace, like running a household or care-giving.

If you’re young, single and healthy, life insurance may not be top of mind. But it’s actually the best time to purchase a policy because you can lock in a lower rate based on your age and health. This is worth considering if you plan to buy a house, start a family or want to leave money to family members — or even your favorite charity. If you have loans, a life insurance policy can help your relatives pay those back if they need to (depending on your type of loan).

Q: How much life insurance do I need?

A: Coverage needs can vary depending on life stage and personal circumstances. Determine the amount of protection you need by considering current and future expenses that your dependents need to meet their needs, from day-to-day expenses, mortgage and child care, to college and medical expenses, as well as funeral expenses. Then subtract any existing resources your survivors could draw upon. The result is a good guideline for how much coverage you might want.

Any amount of coverage can make a difference for your family. As a starting point, you may want to consider budgeting 1% of your annual income before taxes. Of course, everyone’s needs are different, and a licensed TruStage agent can help you decide what makes sense for your family.

Q: What type of policy should I buy?

A: The type of policy and coverage amount you choose depends on your goals and financial situation. Here’s an overview of the most common types of policies.

  • Term life insurance provides protection for a specific period, usually 10 to 30 years. It’s generally the least expensive type of policy, and premiums remain the same during the selected time period. There is no cash value with a term policy.
  • Whole life insurance means coverage for life. There’s no expiration date for your policy. If something happens, your family will get a cash benefit.
  • Accidental Death & Dismemberment (AD&D) pays a cash benefit in the event of an accidental death or if an accident causes specific permanent injuries.

Q: How often should I update my policy?

A: It’s a good idea to review your policy annually and any time you experience a life change such as these:

  • Get married or divorced
  • Have a child (or grandchild)
  • Start a business
  • Retire
  • Change beneficiaries

Q: Is life insurance affordable?

Policy rates can vary widely, but it’s possible to find an affordable policy that meets your needs. The price of a policy depends on factors like these:

  • Type of policy
  • Amount of coverage
  • Your age when you purchase the policy
  • Your health status
  • Participation in high-risk occupations or activities

Having a plan in place can help you prepare for the unexpected — and provide the peace of mind of knowing that your loved ones are financially protected. Learn more about the affordable payments options available to credit union members through our partnership with TruStage life insurance and get the protection you need.

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