First off, kudos to you for being curious about life insurance. Many people forgo purchasing life insurance until it is far too late.
Let's begin by defining what "buying life insurance" actually means.
What is life insurance, really?
Life insurance is a simple answer to a difficult question: "How will my loved ones manage financially if I were to die?" If anyone depends on your income or the unpaid work you do, they would most likely struggle if you were to pass away.
Life insurance pays cash—also known as a death benefit—to your loved ones when you die. It replaces your income and the many non-paid ways you support your household. Your family can use this cash to help pay for immediate and ongoing expenses like funeral costs, daily expenses, a mortgage or rent, and keep a business afloat. It can also be used for future expenses like college tuition, retirement and more.
How much will it cost me every month?
It's less expensive than you think. (To get started, you can use our online life insurance needs calculator to see how much insurance you should have, within minutes.)
Here's how a life insurance policy is tabulated. An agent working with you to create your plan will take into account four main factors about you: your age, your health, the type of policy you are looking for and how much coverage you are willing to buy.
In general, you’ll pay less the younger and healthier you are. This makes sense, if you think about it. The insurance company is more likely to pay out a death benefit to someone who is older and sicker than someone who is in the prime of their life.
To put the price in perspective, a healthy 30-year-old may be able to buy a 20-year level term policy for about $13 a month that pays a death benefit of $250,000. (Again, very rough numbers here, based on a non-smoker at the very best cost.)
This means, if you were to hypothetically purchase a policy like the one above, and pay $13 a month without fail, your loved ones would get $250,000 death benefit if you were to die at any point during those 20 years.
Think about that for a second. $13 a month to take care of your loved ones after you're gone. Doesn't it seem worth it, now that you know the numbers?
How big of a policy do I need?
The amount of life insurance you'll want to buy depends on two factors: a) who you want to protect financially and b) for how long.
As a very general rule of thumb, experts recommend purchasing a life insurance plan that equals between 10 to 15 times your gross annual income. So, as an example, let's say you make $60k a year. The low end of that would end up being a $600k plan. The high end would be $900k.
You may need more or less than that. It all depends, really, on what you want life to look like for your loved ones when you're gone. An easy way to get a working idea of how much you need is to use an online Life Insurance Needs Calculator.
Are there different types of life insurance?
Is there a "best time" to get life insurance? Am I too young? Am I too old?
You're not wrong. The best time to start getting life insurance is when you’re young and healthy. This is because premiums - amount you pay each month for your policy - will be less expensive compared to when you’re older.
That's why we push for you to get insurance now. Why? Because you are, at this moment, the youngest you will ever be... again. Today is the cheapest your policy will ever be.
Another fun fact: men universally pay higher than women because the cost is based on risk, and typically men have shorter life expectancies than women.
How is my rate calculated?
There are three primary factors at play here:
- Your age. The price of life insurance increases the older you are. You can lower your rate by taking out term insurance or by purchasing a “convertible” policy.
- Your health. If you have a chronic disease such as diabetes, cancer or heart disease, your life insurance rate will likely be higher than for healthy people.
- Your marital status. Married people are considered a lower risk because they tend to live longer compared to single or divorced individuals.
What's the first step towards getting insured?
Ask an Expert
How do I find a professional to talk to about this?
There's no better way to move forward with purchasing life insurance than to reach out to a qualified professional. The Hanna Agency has one endeavor, and that is to educate people about their choices. We are not trying to sell you insurance. However, we are able to, under certain circumstances, to do so, if that is what you want.
There are many ways to reach out to us. The fastest might be using the form below:
