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Life insurance is a decisive financial tool to protect your family and loved ones if you die unexpectedly. There are various reasons you might choose to shop for insurance- to financially protect a spouse or partner, a child, a business, or assets like a home or investment property.

Deciding on the type and coverage amount can sometimes be overwhelming, but here are some of the factors that might help your decision:

  1. How much coverage is needed?
    1. Insurance is an attempt to cover your human economic factor- how much money do you project that you will make from now until retirement? Are there specific assets you are trying to protect, like a home? What are the costs associated with the asset’s upkeep and continuing protection, and how do they factor in your coverage amount?
    2. Consider any group insurance already set up through work. In many cases, if you leave your employment, these policies are not portable. Depending on your career goals and path, it might make sense to have a policy that isn’t tied to an employer. Or to supplement your group coverage with an outside policy to offset gaps between what is needed and offered.
    3. Your current income affects the amount of coverage you are eligible for; if you make $50,000 a year, you typically qualify for $1,000,000 of coverage. Make $100,000 – $2,000,000 of coverage.
  2. What type of life insurance policy will work with your short- or long-term needs and goals? How long do you need the insurance to cover? What kind of budget do you have?
    1. Term – is temporary insurance, where you have the insurance for a set amount of time for one or more years. Term policies only pay a death benefit to the beneficiary if the policyholder dies during the specified term. Term doesn’t build up any cash value. Some allow a conversion to more permanent insurance without any health exams. These types of policies tend to be the least expensive.
    2. Whole Life- Permanent life insurance is for the long term. These can build up cash value, in some cases pay dividends, and can ensure lifetime coverage.
    3. Universal Life -UL is permanent life insurance that has an investment savings element and low premiums.  In addition, many offer a flexible premium options.
    4. Variable Life insurance- this is a permanent insurance policy with an investment component. The cash value can be invested in several sub-accounts. Sub-accounts are similar to a mutual fund but only available in a variable life insurance policy.
  3. Is the insurance company ownership and structure important to you?
    1. Stock-owned companies’ fiduciary duty is to their shareholders.
    2. Mutual insurance companies are owned by the policy owners who have insurance with them and have a fiduciary duty to the policyholders.


Life insurance is a financial tool that should be looked at through the lens of your whole fiscal picture, needs, and goals. We would love to sit down with you and discuss your insurance needs. Scarlet Oak Financial Services can be reached at 800.871.1219 or contact us here.