Getting life insurance can be a big step, but it can protect your loved ones in case you pass away unexpectedly. It will guarantee that your beneficiaries, such as your spouse or dependents, will receive a certain sum of money if you pass away. There are several kinds to choose from.
Choosing the Right Insurance
You can choose from a range of policy types to fit any preference or need. Depending on your needs, you can choose between permanent and term life insurance. There are pros and cons of each type. Despite its name, you do not need to keep permanent life insurance if you no longer want or are able to cover the premiums. No matter what kind of policy you choose, you always have the option to sell your life insurance policy at any time. You can review a guide with more information about how to take advantage of a life settlement to sell your policy.
Term coverage lasts for a specific number of years before your coverage ends. You will determine how many years you wish to receive coverage, and the average length can be anywhere between 10 to 30 years. Many are affordable while still offering sufficient coverage. For example, renewable term life can be renewed each year, and the premiums will increase each year. It’s usually not that expensive in the beginning but can add up. On the other hand, decreasing policies are renewable but the coverage will decrease over the policy’s life. And a convertible policy allows you to change term to permanent coverage.
This offers coverage for your entire life, unless you no longer make the payments on the premiums. It is more expensive but might come with some additional benefits. For example, one kind of permanent insurance is whole life. This accumulates a cash value, which you can then use for a range of purposes, like making premium payments or even borrowing. You can also choose from final expense insurance, which has a smaller death benefit than many other types. It’s ideal if you are concerned about your final expenses being a burden on your loved ones. However, your beneficiaries can use the coverage for anything, even if it’s outside burial expenses.
If you will face changing financial needs, you could go with universal coverage, since the cash value earns interest. The premiums tend to be flexible, and you can adjust how much you pay over time. And you can also change the death benefit. This could be useful if you would need a larger death benefit now but not so much later on.
Understanding Permanent vs. Term
If you don’t have complex needs, you could choose to go with term, since it tends to cost less and is simpler. It’s good for families with young children in the home – once the kids are grown, the parents may no longer need as much coverage. Still, if you want to borrow from your policy at some point, you might want to go with permanent coverage