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There are many kinds of life insurance, but two common types are term insurance and permanent insurance (sometimes called whole life).
Term insurance is designed to meet temporary needs. Term insurance is often popular because premiums are typically lower starting out than premiums for permanent insurance. A term insurance policy is written for a specific period of time (the "term") and generally pays a benefit only if you die during that term. Typical "terms" are five, ten and 20 years. Term insurance often makes sense when you have a need for coverage that will disappear at a specific point in time. For instance, you may decide that you only need coverage until your children graduate from college or until a particular debt is paid off, such as your mortgage. The term policy can typically be renewed at the end of the "term", but the premium will increase, and often the increase can be substantial.
Permanent insurance provides lifelong protection. As long as you pay the premiums, and no loans, withdrawals or surrenders are taken, the full face amount will be paid in the event of your death. Because it is designed to last a lifetime, permanent life insurance accumulates cash value which can be borrowed against, should you need the funds. Most of the time, too, the premiums won't increase.
Here are just a few things to consider. You may have life insurance through your employer; but usually, there's a maximum limit on the policy amount available to you; AND you can't keep the policy if you no longer work at that company. So your current employer may provide you with life insurance; but it's a good idea to consider also having your own plan that you control. It's also very important to remember that the older you get, the higher your risk of incurring an illness or a health condition which would make the premium on a new policy higher or might make you ineligible to buy the insurance altogether.
You may choose term insurance, you may choose permanent insurance, and you actually might decide on a combination of the two. So how do you figure out how much you need and what makes sense for your particular situation? Call us and let's talk !
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