Life insurance isn’t just for the elderly. In fact, most people purchase life insurance when they’re still young as a backup in case something happens to them. The sooner you purchase your life insurance policy, the cheaper it will be. Don’t put off buying a life insurance policy; start looking into life insurance options today.
You may not be at a point in your life in which life insurance is absolutely necessary, but planning ahead is always smart. Think of it this way: your loved ones will be in mourning following your death, whether it comes suddenly or in years to come; you don’t want the added expenses of funeral costs and possible medical bills to cripple them financially.
One reason people opt for different life insurance policies is due to their costs; some people would rather choose the option that will cost them less now, while others prefer the policy that will lead to more money saved in the long run. Overall, this is the thought process most life insurance buyers have when deciding if they’d like to invest in term life insurance or permanent life insurance.
Term Life Insurance
Term life insurance is a policy that you can purchase to cover a certain length of time. You can purchase this for 5, 10, 20, or 30 years, among other amounts. Some people invest in this policy if they have a child that they want to help through college; investing in a policy that ends when they graduate from college could guarantee that they receive full coverage all four years. The drawback of this policy is that it has an expiration date; that being said, if you don’t pass away during the time in which you buy the policy, you won’t receive the payout. If you have a lot of money in savings, this could be a great option for you, as your family wouldn’t rely on a life insurance payout to stay afloat. In addition, this is usually the most affordable life insurance option. If you’re on a tight budget, this could be your best bet.
There are two major types of term life insurance. Annual renewable term life insurance usually has the lowest premiums at the start of your purchase, but these rates increase as you get older. If you’re concerned with your financial situation at this current moment but believe you’ll be in a better financial place in years to come, this could be a good option for you. Level premium term life insurance allows you a fixed-rate premium during the duration of your policy. With this policy, you won’t be surprised by premium increases as your policy progresses.
Permanent Life Insurance
This type of life insurance lasts you for the rest of your life, as long as you pay your premiums on this coverage. Other than the lifelong coverage, another perk of this policy is its flexibility. People have the ability to take money out of their savings with this policy, and can pay extra in advance, so they don’t have to worry about making a monthly payment. In addition, purchasing this type of life insurance coverage allows customers to build equity in the form of cash savings. Unfortunately, this life insurance policy has higher monthly premiums than term life insurance does. Unlike term life insurance, your permanent life insurance premiums will cost the same for the rest of your life; you know what you’re getting into when you invest in this type of policy.
The two major types of permanent life insurance as whole life and universal life insurance. Whole life insurance allows its customers to set a fixed premium rate, so they will be paying the same amount every month. Universal life insurance allows you to adjust the prices of your premiums and coverage amounts. This flexible plan even allows you to alter your death benefit; knowing it’s not set in stone may give you some peace of mind. Deciding if you want a set payment amount and death benefit is the key way to figuring out if you want whole or universal life insurance coverage.
Why Not Both?
If you don’t have the money to invest in permanent life insurance at this point, you can look into buying term life insurance for a certain amount of years, then investing in permanent life insurance when this policy runs out. A “convertible” term policy allows you to change from a term life insurance policy to a permanent policy without having to take a medical exam.
Along with figuring out the type of life insurance you’d like to invest in, another decision you’ll need to make is figuring out how much life insurance you need based on a series of algorithms. This thought process is based on various factors, including the amount of debt you’re in, your income, and the amount you want to put away for your children or other family members.
Deciding what type of life insurance policy you think is best for you involves weighing out the benefits and drawbacks of each. Talking it over with your significant other is a good way to plan ahead for his or her future, as well as the future of any children you have or plan on having. The best way to make this choice is to talk it over with an insurance agent and finally, shop for life insurance rates to make sure you’re getting the best possible rates for your preferred policy.