As members of the LGBT community begin to age, they may have to get more serious about their insurance needs.
The older you are, the more you realize you aren’t invincible anymore, and you begin to realize that bad things don’t announce themselves in advance – they happen without warning. When the chips are down, it’s smart to have insurance you can lean on. Once you qualify for Medicare, it can cover many healthcare-related costs, but it won’t cover all of your needs.
Whether you have a life-changing medical condition, a serious automobile accident, develop a disability, or need to provide money for your loved ones if you should die, it’s a gamble to skip having the proper insurance.
Understanding Life Insurance
One of the most feared insurances is life insurance. Some people think purchasing life insurance puts some sort of universal target on their back, as if they won’t die if they decide not to plan for it. That kind of thinking results in nothing more than leaving their loved ones in a lurch when they do pass away.
Life insurance may offer protection and peace of mind to your family. You can set the amount as high or low as you want. You can go with a smaller policy if you only need enough to cover your burial expenses. You can purchase a much larger policy if you want to pay off the mortgage and any other bills for the family you’re leaving behind.
There are two main types of life insurance – whole life and term. Term insurance is easy to understand. You set a length of time that the policy covers you – it may be one year or it could be even up to 30 years. If you die during that time, your survivors receive the amount of money you set up with your insurance provider. Term is the most affordable option generally, with a good term policy costing less per month than a person might spend on a dinner in a nice restaurant.
Whole life insurance will pay out no matter how long you live. Your policy never expires as long as you’ve made all the necessary payments. If you decide to leave the whole life policy early, before you’ve made all your payments, you will have a cash value you can take out. This can be used to help supplement healthcare needs your health insurance might not cover.
How much life insurance costs depends upon several factors, including your age, whether you smoke, how much insurance you want to carry, and whether you go with term or whole life.
How to Pick the Right Policy
Deciding between term and whole life insurance isn’t easy, but there are some factors that can help you decide which is best for you.
If you only need insurance for a certain length of time, you might consider opting for term. Perhaps you’re in your mid-30s, have young children, and you already have a significant amount saved up in a 401k. You might only want to have life insurance long enough to protect your children should something happen to you before they are out of college. You could get an inexpensive 20-year term policy that would protect you for that long. When that term expires, your 401k might then be big enough to leave an inheritance for them and take care of your burial costs, even without life insurance.
Another time you might consider term insurance is if you need a big life insurance policy, but you can’t afford much money each month to pay for it. Because it only covers you for a limited period of time and isn’t a permanent policy, it’s cheaper than whole life.
You should consider whole life if you know you want lifelong insurance coverage. While term life insurance policies are cheaper while you are younger, the premiums go up by quite a bit every time you renew them. So, your whole life policy might be much cheaper for you in the long run than term would be if you carry life insurance for your whole adult life.
Another reason to think about whole life insurance is if you want to be able to borrow money in the future against your policy. Some whole life insurance policies let you borrow money or incorporate some form of a savings element in the policy.
Two main things you should look at when determining which policy to choose is cost and your health. If your health seems to be on shaky ground, you might be better off seeking term insurance because it will carry cheaper policies. If you don’t think you’re going to live long enough to benefit from whole life, you might consider choosing term.
Insurance can be a useful tool for those in the LGBT community – not just for individuals, but for the family they leave behind. It can give a lot of peace of mind to people to know their loved ones won’t have to struggle with their finances while they are also grieving the death of someone they love.
By Andrew from LendEDU – a consumer education website and financial product marketplace. Andrew has gained plenty of experience writing in personal finance over the past several years.
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