Taking the time to choose the right life insurance for you is important to ensure your family is taken care of after you pass away. When buying insurance you have to decide what option is best for you. There are two primary types of insurance to choose from, permanent life insurance and term life insurance. Knowing the difference between the two and knowing what your needs are will help make this decision easier.
Term vs. Permanent
A life insurance policy that covers a specific period of time (one, five, ten, twenty years) is called a term life insurance policy. A policy that covers the entire life of the individual is a permanent life insurance policy.
A term life insurance policy only covers a given time period so it is the cheaper of the two options. When the policy expires and the policy holder is still alive there is no pay out but the insurance is renewable when it does expire. With the permanent life insurance there is no worry about it expiring before the holder dies. Also, the policy can be borrowed against by the policy holder.
Choosing the Right One
This can be a difficult task but if you want life insurance and you can’t afford the permanent policy, there is a term life policy you can choose. You will still have insurance without breaking the bank. Just remember you can’t borrow against this one and there is no cash option after the policy period ends. So if you want a life insurance policy you can borrow against, this is not the option for you.
How Much Coverage Do I Buy?
This will really depend on your circumstances. If you have bills that your family will be responsible for later you will want to purchase an amount that would take care of these bills along with mortgages, unpaid debts or other expenses like medical and burial costs. A good starting point is to buy a policy that is at least 10 times your annual income.
When the Policy Ends
The term life insurance does have an expiration date but you may have an option to renew depending on the terms of the insurance company and your policy. Sometimes you will have to provide evidence of insurability by undergoing a physical exam to determine if you have any pre-existing medical conditions. Not all medical conditions are bad but some can make you uninsurable so it’s important to discuss this with your insurance provider.
Where Can I Buy Life Insurance?
There are many companies that will sell you life insurance. They will have term and permanent policies to offer and will be able to help you choose the best one for your needs. Make sure the company you choose is a reputable company because the security of your family is important. Look at the price, the ratings, the financial strength of the company as well as claims and customer service. You want a company that is top-rated to offer you the best life insurance for your needs.
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