The life insurance business is built on our most basic fear: death. And though death is inevitable for all of us, the financial strain that often accompanies it isn’t. Life insurance is designed to relieve people of the financial stress and ensure that when you or a loved one dies, the survivors aren’t overly burdened.
But it can be difficult to separate money concerns from the emotions tied to mortality. When it comes to life insurance, it important to chose a policy that truly makes sense for you, rather than one based on fear and anxiety.
For example, it may be tempting to go overboard in an effort to make sure your loved ones are financially secure, but some life insurance can frankly be a waste of money.
“Life insurance was never designed to be an investment vehicle,” says Chad Nehring, a certified financial planner based in Appleton, Wis. It’s meant to cover expenses like the cost of a funeral or to help a surviving spouse pay off mortgage and car payments, he says.
Some consumers may also choose to use life insurance benefits to cover child care and put their kids through college, but when it comes to funding a luxurious, jet-setting retirement, that’s what a separate retirement fund is for, Nehring says.
If you’re looking for a way to make sure your spouse or your heirs don’t get into financial trouble as a result of your death, but you don’t want to overpay for a plan that’s not right for you, here’s what you need to know about life insurance.
Americans with full-time jobs can get employer-sponsored life insurance paid by their company, but the policy you’re offered may be a one-size-fits-all plan that’s not enough for you and your family.