Breaking it Down: Life Insurance

One of our BHFCU staff just went through the process of exploring life insurance for the first time. Here’s her perspective.
It’s common practice to insure homes, vehicles, and businesses. When it comes to life insurance, things become a bit grayer. Shortly after turning 30, an insurance agent talked to me about life insurance for the first time. And I’m so glad he did.
My partner and I had just purchased our first home together and enlisted the help of a recommended insurance agent to determine the coverage we needed. The following was my experience.
My first thought was, do I need life insurance? Over three decades had passed, and no one had mentioned it. Between my homeowners, vehicle, and umbrella policies, I assumed I was covered. The answer was surprising: maybe not.
Things like owning a home, owning a vehicle, and having children all come with certain expectations over a lifetime. If something were to happen to the person responsible for those things, what challenges would that leave for my family? These are some of the primary considerations when deciding if life insurance is right for you. I asked myself, what burden would I leave behind, and how could I make the burden less?
After walking through my assets and debt, the answer for me was a simple one. Life insurance coverage would help my significant other pay off our home and vehicles, and lead a comfortable life without my income. It may seem unnecessary at age 30, but it was the most loving and responsible decision.
And the good news, the younger and healthier you are when you begin life insurance coverage; generally, the more cost-effective it is. Another bonus of securing coverage while young and healthy, if a health situation does arise and you’ve been making regular policy payments, you will still be covered at the lower premium.
I’d decided I needed life insurance, but what type of insurance was the best fit for me? There are several types of life insurance, the most common being Term Life and Whole Life.

  • Term Life: These policies include premiums that remain level for a specified period of time, after which they typically increase. The term of this policy usually falls between 5 to 30 years. There is no cash value other than the death benefit, which will be paid should the insured pass away. Due to the lower cost and risk, term life is the preferred choice among younger individuals. This is where I landed on the spectrum.
  • Whole Life: These policies provide permanent insurance, which increases throughout your lifetime. This type of policy accumulates cash value over time and will continue coverage for as long as premiums are paid. It could become a strong part of your financial plan. This wasn’t the option for me, but it could be what is right for you.

The cost of life insurance varies from person to person based on many factors, including health, age, and pre-existing conditions. The most important lesson I learned through the process was: if a potential need exists for you, the sooner you sign up, the better. This will allow for the lowest possible premium cost.
Life insurance can seem daunting; it did to me too. Understanding when is the right time and what is the right coverage is essential. With so many companies providing coverage, it is best to sit down with someone you trust.
An excellent option for BHFCU members is to meet with our insurance team for a free insurance review. The team’s goals are to make all insurance, including life insurance, easier to understand and to ensure you have the coverage you need. Call 605-718-7888 to get started.