What Type of Insurance Do I Need?
The nature of your needs or goals will point to the type of insurance that would work best for you.
|
There are many types of life insurance policies, but they generally fall into two categories:term insurance and permanent insurance.
Term insurance offers the greatest initial amount of coverage for the lowest premium. It provides protection for a specific limited period of time and is best suited for needs that are temporary. It makes the most sense when your need for protection will disappear at some time in the future, such as when your children are grown and on their own or when all debt is paid. The most common term policies run from 10 to 20 years, but can run the gamut from 1 year to 30 years, or sometimes more, and typically include guaranteed rights to convert the term policy to a permanent policy without having to qualify for coverage again with the insurance company.
Permanent insurance provides protection for life. As long as you pay the required premium the company cannot terminate the policy, and the policy can accumulate cash value that grows tax-deferred. This cash account can be used for a variety of reasons such as helping you with a short term emergency, taking advantage of an opportunity or supplementing your retirement income. The premiums for permanent policies are higher than term insurance issued for the same initial face amount. |
|
How Much Insurance Do I Need?
The real question is how much would your family or others that depend on you need?
Living Benefits
Many modern day policies offer benefits other than just the death benefit payable at your death. These are commonly referred to as Living Benefits. Living benefits such as those for terminal illness or critical/chronic illness allow you to receive part of the policy’s face amount while you are alive to help pay the costs associated with those medical conditions. Other policies offer true Long Term Care benefits that are payable based on satisfying the LTC definitions of being unable to perform certain activities of daily living (see the Long Term Care section for more information).
There are countless products and variations available in the insurance market. The type of life insurance and benefit options that are right for you depends on your unique circumstances and financial goals.
Many modern day policies offer benefits other than just the death benefit payable at your death. These are commonly referred to as Living Benefits. Living benefits such as those for terminal illness or critical/chronic illness allow you to receive part of the policy’s face amount while you are alive to help pay the costs associated with those medical conditions. Other policies offer true Long Term Care benefits that are payable based on satisfying the LTC definitions of being unable to perform certain activities of daily living (see the Long Term Care section for more information).
There are countless products and variations available in the insurance market. The type of life insurance and benefit options that are right for you depends on your unique circumstances and financial goals.