How Do I Choose the Right Type of Life Insurance To Protect My Family and Business?
Making a decision to protect your family or business with life insurance is a very important one. Do you need term life insurance, whole life insurance, universal life insurance or variable life insurance? How much life insurance coverage do you need? What exactly is life insurance? How does it work? And what is it really for?
Important- Your decisions on how you should be protected can affect your family or business greatly. It is highly recommended that you seek the advice of an expert that can explain the various types of life insurance policies and provide options that can meet your specific needs.
Well, first life insurance is a concept where you purchase a policy (contract) that will pay the person or entity (beneficiary) you choose in case you die. That’s it in a nutshell; it’s a contract that provides financial compensation after your death.
How Much Life Insurance Do I Need?
People often struggle with how much life insurance to buy. This all depends on what you are going to use the proceeds for or who you are trying to protect. Here are a few items to think about when determining the amount of coverage you need. Remember these are just a few examples.
- Replacing the primary breadwinner’s income. Some families have opted to have only one spouse work outside the home. If that’s your family’s situation, this income needs to be replaced completely and usually for a long period of time.
- Replacing your total family income. Even if both you and your spouse currently work, your lifestyle probably demands it. Very few can live on one income today.
- Funding future needs of your family such as, college, weddings, burial needs, special needs for children, care of elderly parents.
- Paying for your spouse to obtain additional education and start a career or just to re-enter the job market if they have taken off time to raise children.
- Helping fund a charity you love. Yes, you can leave life insurance proceeds to churches, schools or other charities.
- Transferring your wealth, estate planning or accumulating cash. Many financial planners use life insurance after other vehicles are exhausted.
As you can see there are quite a few uses for life insurance after you decide what you want to protect or what legacy you wish to establish. You now need to decide which vehicle or type of policy is best for your situation.
What Are My Choices …
There are two basic types of life insurance and they each come with many options. Once you figure out the need or purpose of your life insurance, you can decide which type best fits your situation. Below is a quick description of the two basic types.
The first and most popular form of Life Insurance is Term. This might be best especially if you are young, healthy and starting a family. It is known for offering affordable rates or lower monthly payments. However, term life insurance will only cover you for a limited time. Think of it as renting a policy; when the time is up the policy ends. Then if you still need coverage you must obtain a new policy, and your health may have declined by then.
The other type of policy available is Permanent life insurance. This might be best if you are looking for something that will last much longer, maybe into retirement. Of course with Permanent life insurance you will generally pay more initially, but it may also cover you even when you are 90 or 100 years old as well as building up some cash value along the way.
As you can imagine, the right type of life insurance policy for you depends on one thing—your own individual situation. Everyone is different and everyone has different life insurance needs. As your life changes—as your children grow up, as your home is paid off, changes in your health —your life insurance needs may change as well.
How Do I Make My Choice?
By working with an expert that can help educate you about the two basic types of life insurance coverage-term life insurance and permanent life insurance can determine what type of life insurance policy makes sense for your own unique situation. You also understand that your needs may change over time and that a combination of both term and permanent life insurance options may likely be a useful strategy for you throughout your life.
The choice between term life insurance and permanent life insurance is a trade-off. There is an upfront cost savings with term life insurance as compared to permanent life insurance. That savings could be put into other investments and could potentially provide a greater return. However, term life insurance policies are not for everyone and they don’t last a lifetime. Permanent life insurance policies do, and they accrue interest on their own cash value.
Beyond these two basic types of life insurance, there are a multitude of options offered in each category. Now that you understand the basics, your next step should be to contact a qualified life insurance agent who can help you determine the best life insurance strategy for you, given your own unique situation.
If you are ready to get started doing more research or ready to get some quotes on different policies give my office a call at 866-869-3335 and let us guide you through finding the best choice and best protection for you and your family.
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