Most of us go through life without a second thought about life insurance. The fact is, if you don’t have a good life insurance policy in place to protect your family or pay off your final expenses, you will leave them financially strapped. Your individual circumstances will determine how much life insurance you need and what type of policy will be most beneficial for you. Your marital status, amount of debt, and the size of your family will all play an important role in how much life insurance you should purchase.
What Are the Two Principal Types of Life Insurance?
There are two principal types of life insurance to choose from. While both have variations, they are primarily used to take care of financial obligations or support your family if the unthinkable occurs. It’s essential to learn what type of policy will work best for you in your unique situation. If you have concerns about how much coverage you need and what type of policy will work best, you need to talk to an insurance expert who can evaluate your needs and help you determine how much coverage you need to purchase.
Term Life Policies
Term life policies are ideal for individuals who just need to pay off final expenses and cover any remaining financial debt. Term life policies get their name because they are set to mature after a specific amount of time, usually 10, 15, 20, or 30 years. Term life policies can be cashed out once they mature or you can borrow against them if you have established a sufficient amount of equity in them. If you do borrow against them, you can pay the money back just like you would pay back a bank loan, or you can add more time to the duration of the policy.
Whole Life/Permanent Policies
Whole life or permanent policies work differently than term life policies in many ways. With this type of policy, the payouts are usually much higher. The premiums are also considerably higher than with a term policy. If something happens to you, your family will receive the full amount of the death benefit no matter how long the policy has been in place. Some whole life or permanent policies have options built in that allow your money to be used in investment opportunities. This can dramatically increase the amount of money you have in your account.
Understanding the different types of life insurance policies and what they are capable of will help you choose the best option for you and your family. Our experienced agents at Medicare Advisors are available to explain the benefits of each type of policy. We will also help you calculate how much of a death benefit you should have in place to care for your family or pay off your debts. While every person has different needs due to their own personal situations, the need for life insurance is what ties everything together. Contact us today to learn more.