What Type of Life Insurance is Right for Me?

What Type of Life Insurance is Right for Me?Are you pondering upon what life insurance plan will best protect your family? It is helpful to determine what type of life insurance policy fits your needs. Some types expire, some have an investment-like cash value, and some are best for older or unhealthy applicants. There are benefits to each, depending on the individual.

Life insurance is needed to protect a family’s financial security. It’s critical in the event of a death to help mitigate financial hardships for survivors, and can also be an excellent tool for estate planning and wealth perpetuation. It’s in your best interest to understand your life insurance options as you go through the purchasing process, so you will be able to determine which policy type is the right one for you.

Term Life Insurance

A term policy is ideal for those with a specific insurance need for a defined period of time. For example, having young kids and, although doing well, you haven’t yet saved a sufficient amount to support your dependents in the event of premature death. This coverage pays the amount on the policy to your named beneficiary. Coverage can include living expenses for survivors, the lump sum amount necessary to fund future educational expenses and future retirement needs of a surviving spouse. Premiums are often fit for individuals up to age 50.

Permanent Life Insurance

Permanent Insurance combines a Term policy with an investment component and earnings grow on a tax-deferred basis, and you may borrow against your cash value. It is available in three ways:

  1. Whole Life insurance relies on insurance company dividends as the source of accumulation inside the policy. These policies are often used to assist beneficiaries to fund a business buyout or pay estate or capital gains taxes on inheritance so properties can be kept in a family.
  2. Universal Life insurance has a cash value, just like a whole policy. Your premiums go toward both the cash value and the death benefit. However, policyholders of universal life policies can change the premium and death benefit amounts without getting a new policy. Although you have a minimum premium to keep the policy in force, you can use the cash value to pay the premium. You can also adjust the death benefit within limits outlined in your policy, which is appealing if your financial situation changes.
  3. With Variable Life insurance, cash value is similar to investing mutual fund-like sub-accounts where you can get some decent growth, but may also lose money depending on the market. The cash value is more or less placed in the stock market.While this makes variable life insurance policies a better investment option than whole life policies, the potential for higher, tax-deferred growth allows you to only invest in the sub-accounts available through your policy. That means you don’t get to choose from the wide variety mutual funds that are an option on the market.

About Barnes Insurance Agency

At Barnes Insurance Agency, we specialize in vacation home rental insurance to ensure the protection of your property and assets. We strive to offer customizable solutions to meet your specific needs. For more information, contact us today at (877) 279-2500.

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