How to Select a Life Insurance Plan | AZ Life Insurance Brokers

If you’re a financial provider for your spouse, kids or other family members, it’s helpful to get a life insurance policy that protects them should you pass away. Life insurance provides financial payment to the policyholder’s named beneficiary or beneficiaries if the policyholder dies. A life insurance policy can help ensure surviving family members can continue living the lifestyle they’re accustomed to, even when the policyholder’s income is no longer available.

Some reasons you may want to get a life insurance policy include:

• Your beneficiaries would face financial challenges without your income.
• You have debt that would be difficult for your loved ones to pay off if you pass away.
• You want to provide financial coverage for final expenses, such as a funeral and end-of-life expenses.
• You want to ensure a financial legacy to pay for expenses like your kids’ college tuition or your spouse’s retirement.

When you decide to get life insurance, you have a few options available depending on your and your family’s unique financial needs. Here’s what to consider when you want to get a life insurance policy.

1. Understand the Types of Life Insurance

First, it’s helpful to understand what types of life insurance you can choose from, to make the right decision based on your budget and your potential financial needs. Life insurance options include:

• Term life insurance: Term life insurance lasts a set number of years and typically has a lower monthly cost compared to another type of life insurance, permanent life insurance. With term life insurance, you set the “term,” or number of years the life insurance policy will be active for. Typically, term life insurance policies last 10, 15, 20 or 30 years. Once the policy’s term length ends, the payout possibility ends, as well. Term life insurance can be helpful when you know you’ll want coverage for a specific amount of time, such as until all your kids reach adult age, for example.
• Permanent life insurance: Permanent life insurance provides coverage for your whole life. With a permanent life insurance plan, your premium payments will also accumulate cash value. You may be able to access this cash value while you’re still alive. There are several types of permanent life insurance, including:
• Whole life insurance: Whole life insurance provides lifetime coverage and builds up cash value as you pay your premiums.
• Universal life insurance: Universal life insurance is similar to whole life insurance, but the cash value earns interest. There may also be options to adjust your premium amounts over time.
• Variable life insurance: Variable life insurance is similar to universal life insurance, with the additional option to invest cash value from the life insurance policy into a different account.
• Final expense life insurance: Final expense life insurance, also sometimes called burial life insurance, provides coverage for end-of-life expenses like a funeral and burial. According to World Population Review, the average funeral cost is around $9,000 in the United States, but final expenses can increase, especially if the deceased has outstanding debts. This type of life insurance provides coverage of around up to $35,000 for end-of-life expenses.
• Survivorship life insurance: Survivorship life insurance, also called joint life insurance, provides life insurance benefits to two people on a single policy.
• Mortgage payoff life insurance: This life insurance policy helps cover mortgage expenses, with coverage terms aligning with an outstanding mortgage balance.

Regardless of what type of life insurance policy you get, some coverage is better than no coverage. Life insurance can help your spouse and/or your kids stay financially stable if you pass away. It provides peace of mind that your family will receive financial support to help with everyday and outstanding expenses, depending on what policy you choose.

2. Consider Your Family’s Financial Situation

Your current budget and your financial needs will likely impact your life insurance policy choice. You’ll want to take into account family expenses and financial planning including:

• Current monthly expenses, like a mortgage, bills and childcare expenses
• Current debt
• Small business expenses, if someone in your family owns a business
• College tuition expenses for children

Generally, term life insurance is less expensive than permanent life insurance. The coverage timeline will be shorter with term life insurance, and the policy won’t accumulate cash value.

Term life insurance is an affordable option to keep you covered for your desired amount of time. You can also typically lower your expenses the younger and healthier you are when you apply for a term life insurance policy.

If you have a bigger budget for life insurance, you might be interested in permanent life insurance. A benefit with permanent life insurance is that you may be able to access the cash value and even invest it to increase your savings.

Another benefit of permanent life insurance is that you’ll always have the same policy terms throughout the life insurance policy. With a term life insurance policy, if you decide to renew it or get a new policy later on, costs will likely go up as you age and your health conditions change.

If you have a limited budget, you can look into lower coverage options like final expense life insurance and mortgage payoff life insurance options. These will still help ensure you have some type of life insurance coverage, making them a good minimal option when you’re exploring life insurance policies.

3. Consult with a Life Insurance Broker



Since there are lots of different life insurance policies to choose from, it’s really helpful to talk with a life insurance expert about what option works best for you, your family and your budget. If you currently have a lot of expenses, it may make more sense to get more coverage so your family is covered when they need to be. If you have a smaller budget, a broker can walk you through affordable options that provide coverage for your unique financial situation.

Talk with a life insurance agent to discuss your and your family’s current income situation, current financial expenses and future financial needs. An agent can walk you through your options so that you get the exact coverage you need, with premiums that fit your current budget.

To learn more about your options for life insurance in Arizona, contact us online, call 602.617.4107 or email quotes@azhealthinsurancebrokers.com. We’ll be in touch with a free consultation.