Today I would like to share three questions you should answer before you purchase life insurance:
Question #1 – Why might I need life insurance?
Question #2 – How much life insurance do I need?
Question #3 – How should I pay for my life insurance?
First, why do I need life insurance?
Ultimately, there is one reason to purchase life insurance: you seek additional financial resources needed to fill a gap if you were to die. That gap might be: family, financial obligations, or charitable impact.
Second – If life insurance is what you need, what amount do you need?
The answer to this question is based on your answer to the first question. When you know the purpose of having a death benefit, it is possible to decide just how much you need to get. Working with a licensed profession will help find the right fit.
Third – Where is the money going to come from?
Basically, there are four approaches to pay premiums:
- Out of pocket
- Have a third party pay for the premiums (such as your company if you are an entrepreneur)
- Borrow the money (known as premium financing)
- Leverage your retirement plan to pay premiums
Again, expertise in this area is often necessary to use loans successfully. Which one works best depends on a wide variety of factors. But the first step is to understand that you do have options to consider – don’t let anyone tell you there is only one method.
I hope this helped you – you can see a summary of the information in the video below. Thank you.