Before You Buy Life Insurance

The act of shopping for a life insurance policy can be a little overwhelming, simply because of the end-stage considerations. But it gets even trickier if you’re not prepared with a working knowledge of the different kinds of coverage.

WHY YOU SHOULD BUY LIFE INSURANCE

Life insurance can help protect those you list as beneficiaries in the unfortunate event of your passing. You’ll have to select the appropriate level of coverage, a company you’re comfortable with, and who these beneficiaries will be. Just be aware that not all policies are alike. Some may accrue cash value over time, but getting a return on your investment isn’t the point of this coverage so much as peace of mind. Once you’ve secured a life insurance policy, your family will be able to rely upon some level of financial security after you’re gone.

PERMANENT VS. TERM

There are two main forms of life insurance, and they have very different parameters. For instance, the length of coverage changes when choosing between term and permanent policies. For instance, many term options cover the insured for a period of up to 30 years, while boasting many flexible options. On the other hand, permanent insurance is designed for lifelong protection and will include whole-life and universal life provisions.

Costs are generally lower at first with term life policies but unlike permanent options, term premiums usually increase with each renewal as the insured person ages.

Permanent life insurance premiums are set and unchanging. Most kinds of permanent insurance generate some form of cash value as you pay the premiums, in a process that may remind some of building equity in a home. If the need arises, you may choose to borrow against or even cash in a permanent life policy. Term insurance doesn’t allow this option, or any other savings component.

HOW TO COMPARE

Experts always recommend getting a few quotes in order to make the best decision for you and your family. Just be sure to compare similar products. Term life policies are generally lower in price than permanent options, and that can mean a huge difference in what you pay for the exact same coverage — at least initially. The differences involve how long you remain on a term plan. So make sure you’re not deciding between quotes that aren’t really alike.

Meet with local agents to find out more.

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