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Prudential Financial: 4 Factors Women Should Consider When Buying Life Insurance

Life insurance is an important piece of any well-rounded financial plan, but it’s not one size fits all. Since women may go through pregnancy or be more likely to take time away from the workforce for caretaking responsibilities, there are certain considerations for women shopping for a life insurance policy that may differ from men.

Here are four factors women should consider when buying life insurance.

1. Choose the Right Type of Policy

The two big categories of life insurance are term life and permanent life (which consists of whole life and universal life). A term life insurance policy provides a death benefit if the policyholder passes away during the policy’s term, generally between 10 and 30 years. On the other hand, a permanent life insurance policy lasts for the policyholder’s lifetime, assuming the policy remains active. Plus, most permanent life insurance policies can accrue cash value, which can be used later in life for a loan or to cover premium payments, among other options.

As women consider life insurance options, it’s essential to consider the policy’s purpose. For example, some women may want a policy to cover a specific debt, like a mortgage or season of life, like when the kids are young. But other women may feel more comfortable finding a policy that lasts a lifetime. If the goal of a policy is unclear, working with an insurance or financial professional may help.

2. Homemakers Need Life Insurance, Too

Some homemakers mistakenly believe that they don’t need the coverage a life insurance policy provides because they don’t bring in a paycheck. The reality is there would be a financial burden on the family if they lost a parent who stays home and manages the household. Consider the potential costs of childcare, cleaning, elder care, and any other services that would need to be paid for without the full-time caregiver being there.

3. Coverage Needs May Evolve Over Time

Women have changing health and financial needs throughout their lives. Some women who choose to have children may apply for a policy at certain stages of pregnancy or look to cover a child using a rider once the baby is born. It’s important to find an insurance company that can support those evolving needs and offers policies for every stage of life.

4. The Policy Needs to Be Large Enough

Women are often guilty of underestimating their value. But purchasing a large enough life insurance policy is critical to making sure loved ones are cared for if something unexpected happens. A standard recommendation is to get a policy with a death benefit of 10 to 12 times salary. Stay-at-home parents may need to use an estimated salary figure based on how much it would cost to replace their work in the household.

When women choose a life insurance policy, they also need to consider longevity as a factor. Since women tend to live longer, they may find lower rates than their male counterparts of comparable age, health, and lifestyle. In turn, women may be able to purchase more coverage that suits their needs at a lower price point.

The Bottom Line

Women need to consider life insurance as part of their financial toolkit the same as men. Since women live longer and have changing health and financial needs throughout life, it’s crucial to find an insurance company that offers the best coverage to suit those needs.

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