No one wants to think about dying before their time. However, if you have a family, it's essential to provide for them, both now and in the event of your premature death. When you start exploring the different types of life insurance policies, it may seem easier to just live forever. However, since that's not really a possibility, learn a few basics about the types of life insurance policies available, and talk to an agent about your specific needs.
Consider Term for Paying the Mortgage
Term life insurance typically comes at a lower price and only for a specific time period. You can dictate the term of your coverage. This is recommended if you need a budget plan. Many people buy a term insurance policy for a specific scenario, such as paying off the mortgage in case of sudden death. It's also recommended if you have small children and you want to ensure their well-being until they complete college.
Accumulate Savings with Permanent Insurance
A permanent life insurance policy pays a death benefit with no specified term. This is advisable if you need life insurance over a whole lifespan, especially if you have permanent dependents. What's more, some policies allow you to grow a tax-deferred savings fund. You can borrow from this fund for any purpose, such as remodeling your home. Permanent life insurance policies typically carry a higher premium than term policies.
Look into Convertible Policies
It's natural for the state of your finances to change over time. Many insurance companies offer convertible policies. These policies allow you to change from a term plan to a permanent plan without having a medical examination. You simply have to pay the higher premiums to convert the policy type.
Choose Your Permanent Insurance Type
Permanent life insurance policies usually come as one of three types. Whole life is most common and offers a fixed rate of interest and fixed premiums the whole time. This means you know the exact cash value of the policy at any time so you can borrow against it if desired.
Universal life insurance also offers a fixed interest rate. It's possible to select a fixed premium, though you can't change the terms later. A flexible universal policy allows you to change the protection level and even frequency of payments.
Variable universal life is a policy that also has an investment component. You can use the investment as part of your planned financial needs.
Do Your Research
Before even consulting an insurance agent, do a little research into your finances as related to the policy types. Once you have some factors sorted, Forbes recommends getting several quotes that fit all your different scenarios. Don't be afraid to ask questions – insurance agents realize this is a monumental decision and you need adequate information to make it wisely.
Be honest with yourself about your life insurance needs, and select the policy that best fits your parameters. Consult with a company like Welsh Agency Inc about any life insurance questions you may have.Share