Life Insurance: Choosing the Right Policy

If you haven't already, it is time to start looking into a life insurance policy. No matter what your age or your current financial situation there are benefits to learning more about the different policy options. Each person has a unique set of needs. Here are a few of the options you have to consider.

Term

Term life insurance is probably what most people are familiar with. More than likely this is the type of policy that your grandparents and even parents have had for an extended amount of time. Your monthly premium is considered low when compared to some of the other options. There is a set amount of time for which you are insured and a set amount that your family would receive. In most cases, this is a simple policy to understand and will provide you with enough coverage to give you peace of mind.

Many families appreciate the idea of covering their mortgage as a benefit to being insured. If a member were to pass away, the mortgage would be automatically paid off. This is usually more than just a regular premium. However, many families see it as a beneficial way to maintain their financial status after the loss of a loved one.

Universal

Universal life insurance offers some flexibility when it comes to premiums. When you make more money, your premiums are raised to compensate for the change. Your premiums can be reduced if you see a decrease in income. While this flexibility is nice, remember that the benefits are changing as well. Paying less means less coverage and vice versa. On a positive note, you do achieve a cash surrender value, which gives you the opportunity to borrow against the policy.

Whole Life

In most cases, whole life insurance has the highest premiums. You pay more, but the rate is locked in for the length of the policy. As you age or experience health concerns, you will continue to pay the same amount you originally signed up for. You might be unsure as to why someone would choose the option with the highest premiums. Aside from the coverage provided, when the insured is ready to cancel the policy, there is a cash surrender value that has continued to grow during the time of coverage. Unlike the term option, you could walk away with some money when you no longer want or need the policy.

So how do you know which option is best for you and your family? Take the time to look at your personal situation. Your age, income, family members, and future should all be taken into consideration. One of the best ways to learn more about life insurance is to meet with an agent and talk about specific concerns and questions you may have.