How Long Do You Need Life Insurance Coverage?
Not everyone needs life insurance coverage for the same length of time. That is, some policyholders just want to be covered until retirement, until the kids graduate from college, while a new startup business is getting off the ground, or for some other limited period of time.
In that case, consider a term life policy that covers you for 5, 10, 15, or 20 years. But if you want to be covered for the rest of your life, you will need to get a whole life or other similar type of policy.
With whole life, the death benefit is guaranteed regardless of when the insured passes away. If you are thinking about leaving a financial cushion for your spouse or other beneficiary regardless of when you’re gone – then whole life is the way to go. Otherwise, term life works fine.
How Long Do You Want To Keep Paying?
With term life, you pay only during the length of the coverage term. With most whole life policies, you pay for the rest of your life or, sometimes, until age 100, 90, or some other relatively high number.
Another option is limited term whole life, where you pay for only, say, 10 or 20 years but secure a guaranteed death benefit regardless of how long you live. This is a great compromise of sorts between ordinary term and whole life for those who don’t like the idea of paying premiums for the rest of their life.
Is Your Policy Also An Investment?
Whole life policies accumulate a cash value and can be used to borrow against at very low interest. They may also involve some dividend earnings.
However, universal life is the best option if you are concerned about earning interest. Universal life is structured as a quasi-investment and gives you more flexibility (than whole life) in regard to adjusting premiums/coverage rates during the life of the policy.
How Do You Define Affordability?
There’s no way around it, the question “can I afford it?” is going to come up as you consider which type of life insurance to buy. Buying while younger and healthier, choosing the right insurance company, or settling for less coverage can bring down costs, of course.
But it is also noteworthy that term life is much more inexpensive than whole or universal life. That means you will want to balance affordability with policy features. You want to make sure you can afford the coverage both now and throughout the policy’s duration – so think ahead!
And also consider the possibility of starting with a cheaper, term life policy today but then upgrading to whole life later.
For helpful, expert advice on selecting the life insurance policy that best fits your needs, goals, and budget, contact Flagler County (FL) Insurance Agency today!