At FFS, we dedicate every September to Life Insurance Awareness Month (LIAM) because too many families still live without the protection they need. This year, our theme is Life Insurance Step by Step — and this week, we’re focusing on choosing the right policy.
Understanding the basics of life insurance was the first step. Now it’s time to take the next one: matching your personal situation to the type of coverage that fits.
Term or Permanent?
The two broad categories of life insurance — term and permanent — meet different needs:
- Term Life Insurance is generally the simplest and most affordable option. It covers you for a set period, usually 10–30 years. Term policies are a strong choice if you want to protect your family during your prime earning years, cover a mortgage, or safeguard your children’s education.
- Permanent Life Insurance provides lifelong protection. It’s often used for long-term goals like leaving a legacy, estate planning, or building cash value. Some policies allow you to borrow against the accumulated value, creating financial flexibility in addition to coverage.
So, the big question is: Term or permanent? Well, as you can see based on the above, the best choice depends on your life stage and your goals.
Term or permanent? The best choice depends on your life stage and your goals.
Tailoring to Your Life Stages
The best policy for you will depend on where you are in life:
- Young professionals often start with term coverage for affordability.
- Parents with growing families may combine term and permanent coverage for extra protection and access to cash value.
- Business owners may use life insurance for succession planning.
- Retirees may focus on covering final expenses and legacy building.
How Much Coverage Do You Need?
How much life insurance should I buy? While there’s no one-size-fits-all answer, a common guideline is buying coverage equal to 10–15 times your annual income. But income isn’t the only factor. Consider:
- Your family’s ongoing expenses.
- Outstanding debts or mortgages.
- College savings goals.
- Retirement planning for a surviving spouse.
It’s a good idea to think about all these factors when deciding on a number for your coverage, but in the end, a licensed professional will help you calculate the right amount and type of coverage for your circumstances.
A common guideline is buying coverage equal to 10–15 times your annual income.
Choosing the right policy can feel intimidating, but it doesn’t have to be. LIAM is about turning complicated decisions into simple steps. Licensed professionals can guide you toward a policy that not only fits your budget but also provides peace of mind for years to come. At any point in the process, an agent near you will be ready to help.
FFS Agents — share this post with your networks using our resources in the ABO.
