Insurance can be confusing, with terms like term insurance, term to 100, whole life, and universal life being thrown around. As a 15-year veteran of the insurance industry, I understand the importance of ensuring that my clients have a basic understanding of why I recommend certain types and amounts of insurance.
I have seen too many instances of people paying too much for insurance because they ended up with a type that pays the insurance salesperson more, rather than the type that is right for them. This can be a conflict of interest, which is why I always make sure to be upfront about it. If a client wants a policy that pays me more, I will never turn them down, but I will always explain why I don't think it's the best choice for them.
So, how do you know what type of insurance is right for you? It all comes down to asking the right questions. The first question to consider is "Why do I/we need life insurance?" There are two main types of insurance: temporary or term insurance, and permanent insurance. Insurance is meant to offset a liability, so you need to determine if the liability is temporary or permanent in nature. For example, if you're taking out a mortgage or other debt, you may only need temporary coverage in the form of term insurance. On the other hand, if you want to ensure that your family isn't left paying for your funeral costs whenever you pass away, you need permanent coverage that will only expire when you do.
Another important question to ask is "How much insurance do I/we really need?" This can be more complex and will depend on factors such as your outstanding mortgage balance, your income, and who is relying on that income. It's important to consider how you would replace that income and for how long if you were no longer able to provide it.
Ultimately, having the right amount and type of insurance is crucial for your financial future. It's essential to take the time to think about your specific needs and make sure you have the coverage that's right for you.
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