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Your Guide to Choosing Life Insurance

Life is full of unexpected events. The key is to plan and prepare for them before they happen. Life insurance is one way to do that. But how much coverage do you need and which type? We can help you figure it out.

How much do you really need?

There are 3 easy ways to find out:

  1. For a quick estimate: Calculate 7 to 10 times your current salary.
  2. Want more detail?: Use our Life Insurance Needs calculator, or "L-I-F-E," as a guide to calculate your:
    • Liabilities (like your mortgage, car loans, credit card, etc.)
    • Income needs for your family to replace your future salary and cover ongoing living expenses, savings needs and an emergency fund
    • Final expenses
    • Education expenses for your child or children
    If you also have a desire to leave a financial legacy, you'll want to add this amount to your LIFE estimate.
  3. Talk to a professional: An Edward Jones financial advisor can look at your entire financial picture and goals, and help you choose the right amount of coverage. You don't want to pay for more coverage than you have to and, even more important, don't want your coverage to fall short when your family needs it.

Needs change over time

If you're young, raising a family and paying a mortgage, you might need more coverage. As you pay down your debts, coverage needs may decrease, or you might want to use life insurance as an investment tool. Throughout different stages of your life, your coverage needs change. That's why it's important to review your policy every few years and whenever you have a life event, like the birth of a child, a marriage or a divorce.

Term or perm?

There are two types of life insurance: term and permanent. How you choose between them depends on your goals for the insurance, how long you'll need it and how much you want to spend.

Term insurance - Term covers a specific time frame—usually 20 years or less. It's the most affordable type of life insurance, making it a great choice if you still have kids in the home and you're paying a mortgage. When the initial term period is up, you may be able to continue the policy, but premiums could rise sharply.
Permanent insurance - Permanent insurance covers your entire lifetime and and could be used for a number of goals. If you have a long-term insurance need, this type might be a better fit for you. Also, if you’re looking for a way to pass along some money to your heirs or a favorite charity, permanent insurance can help fill that need. Some permanent insurance policies allow you to use the death benefit for a long-term care need if one arises, providing you with additional flexibility. In addition, many permanent insurance policies can build cash value within the policy .

Term  Perm
Death benefits pass to beneficiary free of federal income taxes
Death benefits pass to beneficiary free of federal income taxes
Premiums are generally more affordable but can rise with age if you need to continue the policy past the initial term Premiums are usually level, don't increase with age
Generally used to cover a specific timeframe (such as 10 or 20 years)  Offers lifetime protection
No cash value
If the policy has a cash value, it can grow over time, tax deferred
---- Insurability is guaranteed under the contract

What's next

Once you've calculated how much life insurance you need and which type would work best for you, all that's left to do is purchase a policy. It's an important decision and one that should be made as a family. Start having those conversations with yours. With the right coverage in place, you can relax knowing you have a cushion for one more of life's "what ifs."

Important Information:

Edward Jones is a licensed insurance producer in all states and Washington, D.C., through Edward D. Jones & Co., L.P., and in California, New Mexico and Massachusetts through Edward Jones Insurance Agency of California, L.L.C.; Edward Jones Insurance Agency of New Mexico, L.L.C.; and Edward Jones Insurance Agency of Massachusetts, L.L.C.

More resources:

The Real Cost of Life Insurance

Most people would agree that life insurance is important. Those who aren’t covered may not realize just how affordable it can be.

Insurance & Annuities

Protect your family and your income.

Funding Your Legacy with Life Insurance

All your life you've worked hard to provide for your family and the causes that are important to you. With a little planning, you can continue that tradition of caring after you're gone. Learn how life insurance could be the key to helping you achieve your legacy goals, particularly if you have specific wishes about leaving money or property to your heirs or charity.

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    Help protect your family's financial future with life insurance.

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