Choosing the right life insurance plan can be a daunting task, but it doesn’t have to be. Generally speaking, life insurance is a safety measure to protect income and pay for future obligations, such as college funds, tuition, day-to-day bills, car notes, tax bills, burial expenses, etc. What this article will do for you is break down shopping for life insurance into two manageable chunks: term and whole life insurance. By simply addressing your current financial needs and situation, you will be able to pick the option that is best for you.
If you’re looking for a large death benefit with an affordable premium, then term insurance might just be what the doctor ordered. Term insurance, unlike whole life insurance, is for a specific period of time and provides a guaranteed death benefit and a predictable premium. These types of policies usually do not accumulate cash value; however, some do offer a return of premium–at the end of the policy term–for an additional monthly fee.
A perfect application for term insurance is to use it to pay off obligations that leave you financially exposed for a specific length of time, like a debt. For example, you can get a term policy called Mortgage Protection Insurance to pay off your home loan in the event of a premature death. Simply pick the policy term that coincides with the amortization schedule of your loan; i.e., 15 years, 20 years, 30 years, and, upon your demise, a tax-free death benefit will be paid to your beneficiaries.
Insurable needs often increase as one’s financial situation gets more complex over time. One way to make a purposeful insurance purchase is to get a term policy that has “guaranteed convertibility.” What this allows you to do is convert your term insurance to a permanent policy before the policy term ends. If in the interim your health situation takes a turn for the worst, you will not be required to take a medical examination to convert your policy.
Whole life insurance builds up cash value that can be used to supplement your retirement income, or withdrawn/borrowed for emergencies (also known as a “living benefit”). Participating policies (a type of whole life insurance) issued by a mutual insurance company, pay a dividend to their policyholders that can be used to pay either part or all of their monthly premiums.
If your goal is to have a policy that has a guaranteed death benefit, fixed premiums, a savings element, and will stay in force until age 100, then going with a permanent policy is probably your best bet. Keep in mind, whole life policies are relatively more expensive than opting for a term insurance plan. However, over the long haul, whole life policies are more cost-effective than annually renewing a term policy beyond its initial plan period.
Freedom Life Insurance
One company that offers a whole suite of products is Freedom Life Insurance. This 60-year old company offers a full portfolio of products that can be tailored to your health and financial situation. What’s more, is that Freedom Life Insurance is a subsidiary of USHealth Group, which is a rock-solid, A+ rated company (as per Better Business Bureau standards). Learn more: https://www.crunchbase.com/organization/ushealth-group#/entity