The Best Life Insurance Policies For Your Future
Which type of life insurance policies is best for your family?
I cannot answer that question without meeting you, asking some questions, and finding out more about your future goals. But what I help you understand the differences between different types of coverage so you can make that decision for yourself.
There are three basic types of policies, and each one suits different needs:
- Term life covers an insured person for a specified length of time. Normally, once the policy ends, there is no cash value, and coverage is over.
- Whole life can build up a cash value, and sometimes it is used to combine coverage with savings. It does not expire at any specified time. It will remain in force as long as it is paid for or paid up.
- Universal life is a new form of coverage which combines insurance with investments. Life whole life, it does not expire after a term, but will keep insuring a person as long as it is kept in force.
What do you want out of your coverage?
If you are fairly sure that you will have your mortgage paid off, your kids educated, and your savings built within a set period of time, you could consider term. It is usually much cheaper than the other types because it offers only pure insurance, and because it does expire at a point in time when insurers believe you will still be alive.
Because the premiums are lower, it is easier for most families to afford a larger face value. Many consumers choose to purchase enough to pay off a mortgage, and to help their family meet future goals. They believe that within the set term of the policy, say 10 – 30 years, they will not need this coverage any more.
The problem with term life is that it does expire. You can find some policies that will guarantee they can be converted into a permanent policy in the future. This may be an option to consider. The larger temporary policy could be replaced by a smaller whole life policy to keep for retirement years.
Whole life, on the other hand, will not expire after some set length of time. It is designed to cover people for their entire lives. Because of this, and because it can actually build up a cash value, it does cost more. One option is to purchase a larger term policy, and a smaller whole life policy, in order to cover bases.
Universal life is different because it was designed to combine insurance, with investments. Because it can accumulate cash value, and has some tax advantages of insurance, it is attractive to many people. Like whole life, it will not expire after a set time. As song as the policy is paid for, or paid up, it will stay in force.
What Should You Buy?
So which type should you buy? Again, I cannot give one best answer for everybody. Think about your own goals for insuring your family’s security, saving money, and setting budgets.
