You’ve made the smart decision to get life insurance! You want to protect your family should the worst occur. Your next question may be, “What kind of life insurance should I get?” Well, you have a few options, and it may be overwhelming for someone who is unfamiliar with the life insurance market. So, let’s take a look at the two main types of life insurance and how they differ so you can be better prepared to select the type of life insurance that makes the most sense for you and your family’s needs!
The two main types of life insurance are Term Life Insurance and Permanent Life Insurance. Depending on your situation, goals, and budget for getting a life insurance policy, you will certainly want to consciously select one over the other or select a proper blend. It’s important to know the differences to ensure you’re making the right decision.
Term Life Insurance – Also known as mortgage protection insurance, term life insurance policies cover you for a certain pre-specified amount of time for a fixed rate of payment. The payment will always stay the same with a term life insurance policy. Sometimes, you can get money out at the end of a term life insurance policy if you did not use it. Other times, the policy will just expire, and nothing will happen when it’s over. A perfect example of why you would want this type of insurance in place is when you have a mortgage. In the untimely event of death, a term life insurance policy could pay off the mortgage so that your beneficiary owns the home outright without the need to worry about paying the mortgage. This type of insurance can be very inexpensive, so it’s highly recommended.
Permanent Life Insurance – This one is pretty self-explanatory. This type of life insurance policy is a permanent policy. The benefit of Whole life insurance is not only that it will essentially cover you for life, but it can also build cash value! It can be used as a tax-free investment vehicle to build wealth over time while also providing a death benefit, and many people use it for this purpose. This one is typically pricier than Term insurance.
Now that we’ve explored the basics of the two main types of life insurance, you should have a better grasp of what may work best for your particular situation when it comes to life insurance. Now comes the big question, how much does Life Insurance typically cost? Unfortunately, this isn’t an easy question to answer as there are a lot of factors that go into determining your rate. Such as age, physical and mental health and much more. Not to worry though, the good news is people tend to overestimate the cost of life insurance on average by 5 times! Nonetheless, it’s always important to work with a reputable life insurance agent to guide you through the process of selecting the right policy(ies) to ensure you make the best decision possible!
