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Stepping out on your own to start a business can be nerve-wracking. There are endless certifications, licenses, t’s to cross and i’s to dot that can make you question being an entrepreneur at all. However, over time and with hard work, being your own boss pays off in the end.
No matter how big or small your business may be, you have taken the first steps to live your dream and provide a happy life for yourself. As you’re busy planning how to build your business, however, you need to also plan for how you’re going to make up for all of the benefits you miss after leaving your 9-5 job.
The perks of the corporate ladder typically include job stability, dental plans, 401ks, and other big decisions that leave you with not much to figure out past your morning commute. Once we take our careers into our own hands, the freedom we feel can be liberating, but what entrepreneurs often forget is to plan for the days when their family will no longer have them around to rely on.
Yep, we’re talking about life insurance because unfortunately business doesn’t end once you flip your final closing sign. Life insurance can be a difficult subject to understand, but luckily there are ways to easily know exactly how much you need, like using this quick quote calculator for life insurance.
Planning for Life After Life
As you’ve probably already found out in business, it’s hard to know what you don’t know. Finding the right life insurance plan is similar to starting a business and that leaves many people lost and not knowing where to start.
Chances are that there are multiple people relying on you, and once you’re gone you want to make sure your family, business partner(s), and business are set up for success beforehand.
Understanding What you Need
So you know that you need life insurance, but you may not know exactly what you need. There are two different kinds of life insurance — term life insurance and whole life insurance.
Term Life Insurance
This is the basic plan that offers financial coverage in the event that the policy holder’s death occurs while under the policy. Though most term policies are conducted in a simple fashion, there are multiple options outside of the typical 30-year coverage.
There are also two subcategory policy options:
- Level policies have a set death benefit that will stay the same throughout the duration of the policy
- Decreasing policies will slowly drop benefits in increments over time
Level insurance policies are the more popular options and range from one to 30-year term that cap when a policyholder turns 65. Level term insurance is where you’ve probably heard the verbage “renewable” which means that a policy is set to continue unless canceled for the duration of the set policy despite changes in the policy holder’s health.
If you are a new business owner it is best to choose a plan or company that allows for convertible policies.
Whole Life Insurance
Like term life insurance, whole life insurance has three main types of insurance policies, which are traditional, universal life, and variable universal life. Overall, whole life insurance policies tend to be higher in monthly costs, but they come with additional benefits that term policies do not.
For those more settled in life, traditional insurance can be the simplest and most effective policy coverage. If you have kids or a spouse that you would like to make sure are financially covered in the event of your loss traditional insurance is a great option.
A great benefit of traditional insurance is that you can never age out of the policy, and as you age, your policy only gets larger.
Additional benefits policy holders of traditional insurance see is the provided cash value, meaning that if policyholders are ever strained financially, they are allowed to borrow funds.
Traditional insurance also has policyholders set an amount for their loved ones to be left with after their death while maining a set monthly premium. If you know your life isn’t going to be subjected to drastic changes that would affect your last wishes, this policy is a great one to have as the security and comfort you need.
Universal and Variable Universal Life Insurance
If you’re looking for an additional place for your money to grow, these could be the right whole life insurance option for you. Though these policies have similar construction, they function differently.
A variable universal policy is a permanent insurance plan that has cash value and can be accessed by the policyholder like a mutual fund. in order to reap the full benefits Variable insurance requires more effort, which can be a turn off. However, these plans work extremely well when grouped together. That means if you have a large family or even a close sibling, you can benefit from sharing a policy.
Variable and universal policies differ in how your money grows. Unlike the endless investments of variable policies, each payment made into a universal policy gets split into two parts, much like a checking and savings.
In addition to this flexibility comes the option to choose your premium and death benefits, but given that these policies are for a lifetime, that goes a long way.
Live Life Well-Prepared
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Losing a loved one can leave a whole family lost, scared, and hurt in the trying time that is between initial shock and healing. Even in death we can be there for our families and loved ones by making sure they can feel a sense of security with what we leave behind.
Our character is what defines us in times of crisis and dealing with the loss of a family member can bring out some ugly colors. Preparing for a time when you’ll no longer be here can be hard to think about and most of us like to avoid the conversation, but it’s never too early to be prepared.
Life insurance can seem like a future responsibility that you have time to get to, but even if you’re young and single with no kids, it is never too early to plan. With the flexibility that the majority of life insurance policies offer, you can create a basic plan and adjust it as your life changes.
Live happy. Live well. Live prepared.