When you were single, you might not have thought much about getting life insurance. But once you have a family, it becomes more important to protect them in case something happens to you. The good news is that even though it might seem complicated to buy life insurance online, understanding how the process works can make it easier.
One aspect of life insurance to research is being able to convert your assets to a modified endowment contract (MEC). They can actually be quite helpful if you want to find a way to use the assets you are leaving your heirs, especially if you will not be using these assets while you are alive. You can go over a guide with more details to determine if this might be helpful for you.
Getting Enough Coverage
There are some instances when life insurance becomes necessary as you move through the phases of your life. If only one parent works, it might be tempting to purchase only enough coverage for the one who works. However, a parent who stays home to care for the kids is also providing value. That’s because if the stay-at-home parent were to pass away, the surviving parent might have to pay for childcare and even help around the home. A death benefit could also enable the working parent to find a part-time job from home so they could spend more time with the kids as they adjust.
Getting a High Enough Death Benefit
If you want to know how much insurance you should get, consider what the family’s needs would be if you were no longer able to support them. You would start by considering how many earning years you would need to replace and multiply it by the amount of income you earn each year. You should also consider debts, like a mortgage or a car loan. You should also factor in any services you do that you would need to replace. For example, if you are handy at keeping an old car running, you might need to add in the cost of a mechanic’s services or another car. You can then subtract any savings you have already. While you might be tempted to get less coverage to save some money, you should avoid this pitfall. Coverage is there to protect you and your family, so don’t skimp on it.
Choosing Your Beneficiary
You will need to name a beneficiary of the policy, like your kids or spouse. They will receive the funds if you pass away unexpectedly. While you will want your kids to benefit from the funds, you should avoid putting young kids’ names as the beneficiary. That’s because the funds can’t be paid to minors unless the court has appointed a guardian to them. A better option would be to have a trust set up for the kids. This can hold any property and money you would like to leave them, and you can have an adult, like a trusted family member, ready to manage this trust. They can also be the guardian of your kids. It’s best to work with an attorney to set this up. The insurance company will help you figure out how to designate beneficiaries for the account.