What to Consider Before Selecting an Insurance Plan 

What to Consider Before Selecting an Insurance Plan 

Choosing the right insurance plan is a critical part of building your financial future. With so many options available, it can be challenging to know where to start. A well-chosen policy provides confidence in knowing that you and your loved ones are well-positioned against unexpected life events. At Prosper Financial, we help our clients navigate these important decisions with customized guidance tailored to their specific needs.

Before selecting an insurance plan, it’s important to understand your options and how they align with your long-term goals. Key considerations include:

• The type of coverage you need (e.g., life, long-term care)
• The duration of the coverage
• Your budget and what you can afford
• Your current age and health status

Our team can walk you through some of the most common types of insurance so you can make an informed decision.

What Type of Life Insurance Do I Need?

Life insurance is designed with a goal to provide financial support to your beneficiaries after you pass away. The payout can help cover funeral costs, pay off debts or supply income to your family. There are two overarching classes of life insurance: term life and cash value life insurance.

Term Life Insurance

Term life insurance offers coverage for a predetermined period, such as 10, 20 or 30 years. Should the insured individual pass away in this timeframe, the policy pays a death benefit to the designated beneficiaries. It is often a more affordable option, making it a popular choice for those who need coverage for a defined period, like while raising children or paying off a mortgage. Some term policies can be renewed at the end of the term, though premiums may increase.

Cash Value Life Insurance

Cash value life insurance policies are designed with a goal to last for your entire life and include a savings or investment component. This option has the potential for growth over time and may be accessible while you are still alive. This makes it a more flexible but often more expensive option. Common types of such policies include:

• Whole Life: Provides a fixed premium and a value growth potential rate.
• Universal Life: Provides more flexibility, letting you adjust your premiums and death benefit according to how your needs change.
• Variable Life: Includes investment options, allowing you to allocate the value into various sub-accounts, which offer the potential for higher growth potential but also involve market risk.

How Can I Prepare for Future Long-Term Care Costs?

Long-term care is the assistance you may need with daily activities if you have a chronic illness or disability. Individuals turning 65 today have almost a 70% chance of needing some amount of long-term care. These services, whether at home or in a facility, can be expensive and are not always covered by standard health insurance or Medicare.

Long-term care insurance helps cover these costs, safeguarding your savings and assets from being depleted. It can pay for services like assisted living, in-home care or nursing home care. An alternative to a standalone policy is a life insurance policy with a long-term care rider. This hybrid option allows you to use a portion of your life insurance death benefit to cover long-term care expenses if needed.

What Else Should I Consider?

When choosing any insurance plan, affordability is a key factor. It’s crucial to select a policy with a premium you can pay over the long term. Failing to make your payments could cause your policy to lapse, leaving you without coverage.

Your age and health are also significant. The earlier you purchase insurance, particularly when you’re young and healthy, the lower your premiums are likely to be. This is particularly true for life and long-term care insurance. While it may seem early to think about these things, planning ahead can lead to substantial savings.

Plan for Your Future with Confidence

Selecting the right insurance is a personal decision that depends on your financial situation, family needs and future goals. By understanding the different types of coverage and considering factors like cost and timing, you can make choices that provide lasting independence.

At Prosper Financial, we believe in building financial strategies with honesty and integrity. If you’re ready to explore insurance options and create a plan that works for you, our experienced team is here to help. Contact our office today to request a consultation.