Life insurance protects your family should the unthinkable happen, but buying it can be intimidating. When you have the right information and support, however, you can make these decisions confidently. Here are some details to help you choose a policy and decide how much insurance you need.

FAQ About Life Insurance

Are there different types of life insurance?

Term life insurance is only valid for a set term, which usually ranges between 10 and 30 years. While more affordable, if you outlive the term, the policy will no longer be active and won’t pay out when you die. Permanent life insurance is valid as long as the premium is paid. It also has a cash value component that can be borrowed against.

How much insurance should I buy?

Start by adding your total current income and assets, then deduct your current expenses: mortgage payments, utilities, money for groceries, and more. This will give you a rough estimate of how much insurance you should buy. You’ll also need to factor in other costs, such as college tuition for the kids and retirement funds for your spouse.

Should I name a beneficiary?

Naming a beneficiary ensures the proceeds of your policy go to the right person after you die. In most cases, people name their spouse or kids, although you could name anyone you see fit. Beneficiary designations override whatever is contained in your will, so update them when needed.

Are proceeds taxed?

After you die, your beneficiaries will not be taxed upon receiving proceeds. Also, any growth of the cash value component of permanent life insurance is tax-deferred until a withdrawal is made.

When you have questions about how to plan for your future, work with a trusted financial planner from Family Financial Partners. Located in Lexington, KY, their team of financial advisors and investment planners has helped numerous clients with life insurance since 2005. Call (859) 219-1006 for an initial consultation, or go online to learn how they can help you today. Also, visit feeforplan.com for more information about financial plans tailored to your unique stage of life.