Life insurance can seem like a maze with so many twists and turns. It can be so confusing choosing which type is the correct one for you. Sometimes you need more than one type. I ran across this article by Auto-Owners Insurance that might help answer just a few basic questions and give you a starting point when considering life insurance. There are so many products to choose from but the first question is usually Permanent or Term. To help determine the answer, ask yourself why you are shopping for life insurance. The article certainly does not address all needs. That's when a simple call or visit to our office can give you more direction. Take a quick glance at the article and let me know what you think!
Permanent Versus Term Life Insurance
When determining your need for life insurance, you need to know which policy is right for you.
It is important to understand the biggest differences between term and permanent life insurance when deciding which of these products will best provide you and your family with peace of mind.
Term life insurance is a great way to protect your debt obligations without busting your budget. Term insurance doesn’t generate cash value within the policy, which is why it costs less than other types of life insurance.
Most term policies are designated to expire after a certain number of years of coverage. If the insured passes away during the coverage period, the death benefit is paid to the beneficiary.
An example would be a woman who has $50,000 in student loans and had her parents cosign on her loans prior to graduation. This insured might consider term insurance, with her parents as the beneficiaries.
Permanent life insurance is designed for a lifetime of changing insurance needs.
Instead of having term coverage that lasts a certain number of years, insureds can rest easy knowing their permanent policy will never expire and will pay a death benefit to their beneficiary when they pass away. The average funeral cost in 2015 was approximately $7,181.00 (www.nfda.org).
Traditionally with permanent insurance, insureds pay for the policy’s level premiums until they pass away. Other products allow insureds to pay their permanent policy in full within a certain length of time, such as a 10- or 20-pay policy. The younger you are when you opt for a permanent life policy the better, because rates will be lower, and it’s vital in protecting your insurability.
If you understand the differences between term and permanent insurance, you may even decide that it’s better to have both coverage options. A growing family, for example, may need enough death benefit to cover family and living expenses with term insurance, but might also consider an affordable final expense permanent policy for a low death benefit (such as $10,000) to cover funeral costs.
“In the end, it’s not the years in your life that count. It’s the life in your years.” – Abraham Lincoln. Be prepared for whatever life gives you and ask us about life insurance today.