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What Life Insurance Policy Is Best For Me?
If you have a family depending on you, it is more important now than ever to have life insurance. There are many factors to consider when shopping for a policy. Our friendly agent can help you get the best quote on life insurance that suits your family’s needs.
What Are The Major Types Of Life Insurance?
The two major types of life insurance are term life and whole life.
Term Life Insurance
Term life is the most affordable way to buy life insurance. It costs less than whole life because the policy terminates after a specified length of time. If you remain alive throughout the term of the policy, there is no payout when it expires.
Term life insurance gives you flexibility, with various choices in policy length. It is typically sold in five, 10, 15, 20, 25, or 30 years of coverage. Amounts are also flexible, with policies ranging from $50,000 to millions in coverage. Different types of term life insurance policies include:
- Level premium: With this type of term life insurance, you lock in a specific price for the entire length of the policy, typically paying a monthly or annual premium.
- Annual renewable: This is a one-year term life policy that is renewable each year at a higher rate. Annual renewable term life insurance may be a good solution on a temporary basis for individuals who are expecting to buy employer-sponsored life insurance or who want to ensure short-term debts are covered.
Whole Life Insurance
One of the major pros of whole life insurance is that it never expires, provided you continue to pay your premiums on a timely basis. Also, there are no surprises. Your payment amounts will remain the same, your rate of return on the cash value of the policy is guaranteed, and the death benefits do not change. However, whole life insurance is more costly to purchase than term life insurance.
What Factors Should You Consider When Purchasing A Life Insurance Policy?
Factors to consider in selecting the right type of life insurance policy include:
- Age: This is a critical element in choosing life insurance. The younger you are when you buy a policy, the more options you will have, and the less you are likely to pay.
- Gender: As females tend to live longer than males, their life insurance policies are typically less expensive.
- Overall health: You will need to answer medical questions and undergo a physical exam for most life insurance policies. Smoking is a negative factor in determining price. The healthier you are, the less your life insurance is likely to cost.
- Duration: Some people are only interested in having life insurance coverage for a certain period of time, such as 30 years, until the mortgage is paid off. Others want permanent life insurance that remains in place until the time of death.
- Budget: Term life insurance is less expensive to purchase than whole life insurance. However, when the term expires, the rates are likely to increase significantly for renewal.
- Market knowledge: Certain whole life insurance policies can be used strategically to generate cash value.