No one plans to have a heart attack tomorrow, to contract a deadly illness next week or to be in an accident this coming summer. Life in Missouri can be unpredictable (one reason we love it here, right?). That's why purchasing a life insurance policy to care for the loved ones we leave behind is so vital.
Before you search for life insurance quotes, however, careful research will help you decide what policy and coverages are best for you.
You're Young and Healthy, so Why Do You Need Life Insurance?
Simply stated, traffic fatalities are the leading cause of death for Missouri residents age 10 to 25. And according to the Centers for Disease Control, the leading causes of premature death in Missouri (heart disease, stroke, diabetes and cancer) are on the rise.
A life insurance policy will be there for your family members and loved ones when you no longer can be.
Why You Should Buy Life Insurance
Most people don't start seriously thinking about buying a life insurance until they start a family and settle down in one of Missouri's great neighborhoods. At about the age of 30, most people realize they are not indestructible and they have real financial responsibilities.
It’s not too late at the age of 30, 40 or 50 or even later to buy life insurance that will protect your dependents from financial hardship or provide for them in retirement. However, the longer you wait, the higher your premiums will climb. Buying life insurance today can lock in a premium at a more affordable rate than it will be tomorrow.
What's the Difference Between Term and Whole Life Insurance?
The financial needs of your dependents as well as your financial plans should determine whether you should purchase whole life or term life insurance. Most Missouri insurance companies offer life insurance policies that can meet multiple financial objectives. So how do you decide which type is right for you and those you love?
Generally speaking, you have two options: term life insurance or permanent life insurance. Consider their differences:
Term life insurance:
- Provides death benefits only
- Pays benefits only if you die while the term of the policy is in effect
- Purchased for a specific time period, such as 5, 10, 15, or 30 years, (the "term")
- Becomes more expensive as you age, especially after age 50
- Must be renewed if you want coverage to be extended beyond the term length
- Can be used as temporary additional coverage with a permanent life insurance policy
- Can be converted to whole life insurance
Permanent life insurance: This long-term policy includes an investment component and can cover retirement expenses in addition to providing a death benefit. You have several options, including whole and universal life insurance.
Whole life insurance:
- Covers you for life
- Provides death benefits as well as a cash value accumulation that builds during the life of the policy
- Typically requires a health examination in order for you to qualify
- Can be purchased without a medical exam but at a higher cost
- Takes 12 to 15 years to build up a decent cash value
- Can be a good choice for estate planning
- Return on investment determines the cash value
- Allows cash value to be withdrawn or borrowed during the life of the policy
- Initially has more expensive premiums than term life insurance, but can potentially save you money over the life of the policy if in force for a considerable number of years
Universal life insurance:
- Has a "liquid" account that accrues cash value, as well as interest, with each premium you pay
- You can take out loans as needed for unexpected expenses or opportunities, such as a home purchase
- You also can pay more than the scheduled premium or take breaks from paying premiums
What Is Funeral Expense Life Insurance?
Many people opt for life insurance policies designed to specifically cover the costs their family would pay to host their own funeral. With the average funeral in Missouri costing between $8,000 and $10,000, this type of insurance can protect your loved ones from going into debt in order to put you at rest:
Funeral insurance policies include the following:
- Preneed Funeral Insurance: This links directly or indirectly to a funeral service provider in your MO neighborhood. You can make installment payments over 1 to 10 years. This insurance, which can be either term or permanent, remains in effect for your entire life after the premiums are paid.
- Final Expense Insurance: This type of policy does not link to a specific funeral service provider and tends to be cheaper than preneed funeral insurance. It can consist of either a term or a permanent life insurance policy.
- Burial Insurance: This type of policy is usually a term life insurance policy with lower death benefits such as $5,000 or $10,000. The death benefits go to a named beneficiary, who can use the death benefits in any manner.
How Much Life Insurance To Buy
Deciding which life insurance policy to purchase requires a bit of math. You will need to calculate a budget for your family in the event that you die before your time and cannot provide for them. Here are some figures:
- You purchase a $500,000 life insurance policy.
- Upon your death, your family spends $10,000 for your final expenses at one of Missouri's finest funeral homes, leaving a $490,000 distribution over the payout period.
- Let's say the payout period is 20 years. The payments would be about $24,500 per year or about $2,040 per month. Can your family live on that?
The policy you choose will be unique to your financial situation and needs.
What Does Life Insurance Cost?
Like any type of insurance sold in Missouri, the cost of your life insurance premium will depend on the coverage you choose (whole versus term) and a number of additional factors:
- Your Age: Generally, life insurance rates increase as you age.
- Your Health: Do you have any chronic conditions? Do you smoke?
- Gender: Women live longer statistically and typically pay lower life insurance costs.
- Occupation: A teacher may not have the same occupational risks as an underwater welder. Likewise, police officers have a different risk set than a receptionist. The career you have chosen may influence your life insurance premium.
The average cost of life insurance for a 30-year-old male who smokes is very different from the average cost for a 30-year-old non-smoking female.
Protect Your Loved Ones Today for Tomorrow
Finding the most affordable yet comprehensive life insurance for Missouri residents is what the knowledgeable Trusted Choice® independent insurance agents do best. Your agent can help you to plan for your family's future and to start sleeping easy knowing you can provide for your family long after you're gone.
Contact an agent near you for insurance quotes that match your needs and budget.