What Kind of Life Insurance is Best for Me?
Although there are many kinds of life insurance, they typically fall into two categories: term insurance and permanent insurance.
Term insurance, the most affordable type of insurance when initially purchased, is designed to meet temporary needs. It provides protection for a specific period of time (the "term") and generally pays a benefit only if you die during the term. Because term life insurance is a pure death benefit, its primary use is to provide coverage of financial responsibilities for the insured or his or her beneficiaries. Such responsibilities may include, but are not limited to, consumer debt, dependent care, university education for dependents, funeral costs, and mortgages. Term life insurance may be chosen in favor of permanent life insurance because term insurance is usually much less expensive (depending on the length of the term), even if the applicant is an everyday smoker. For example, an individual might choose to obtain a policy whose term expires near his or her retirement age based on the premise that, by the time the individual retires, he or she would have amassed sufficient funds in retirement savings to provide financial security for the claims.
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Permanent life insurance is designed to provide insurance protection for as long as you live, assuming your premium payments are made as required. This is in contrast to term life insurance, which provides protection for a set number of years, or “term.”
Permanent life insurance offers two other important benefits. With a permanent life insurance policy you can: Build cash value in the policy that grows tax deferred and can become a source of funding you can utilize to help meet your financial goals. It's impossible to say which type of life insurance is better because the kind of coverage that's right for you depends on your unique circumstances and financial goals. Often, term insurance is the best solution as it enables you to purchase the amount of coverage needed at the most affordable premium. The best way to figure out the amount and type of life insurance that makes sense for your particular situation is to meet with a qualified insurance professional. |