Choosing The Right Life Insurance Policy

There are a few different types of life coverages available to meet your needs and budget. The two most common types are term life and whole life. But, which one is right for you? The answer is that the kind of insurance you should purchase really depends on your individual circumstances. To know which will work best for you, you must first understand the difference between the two.

Term Life Insurance

Term life is exactly what the name implies—a life policy that ends after a specific period of time. Term life pays a death benefit to the beneficiaries you designate upon your death, but has no cash value. In other words, you can’t “cash in” the policy or borrow against it prior to your death. Of course, the policy only stays in effect throughout the time period if you continue to pay your premiums in a timely manner.

People who purchase term insurance often do so with a specific purpose in mind. For example, an individual who has just taken out a sizeable business loan that he or she wouldn’t want to leave a spouse responsible for might buy term life to cover the loan in the event of his or her death. Term coverage also appeals to those who want to offer their families some protection when they die, but who have a limited income that doesn’t allow for the higher premiums of burial whole life.

At the end of a term life policy, you may be able to renew for another set amount of time. Your premiums may be higher for this next term due to your increased age or illness. You may also be able to convert the policy to a whole life policy at a later date.

Burial Whole Life Insurance

Burial whole life also provides exactly what its name suggests—a life policy meant to cover you for your entire life. Again, the continuation of the policy is dependent on promptly paid premiums.
Burial whole life is more costly than term because it is a policy meant to last over a great length of time without a premium increase. In other words, even if you become terminally ill, your burial whole life insurance premiums will not go up. With term life insurance, premiums remain constant only through the set time, but may increase at the end of the term due to attaining an older age and/or if serious illness arises; possibly preventing renewability.

Burial whole life insurance is designed to meet your permanent needs, including payment for final expenses and adding to a nest egg that can be drawn on in times of need. Whole life does have a cash value that will grow over time and that can be loaned against. However, any loans taken on the amount will be deducted from the death benefit paid. There are number of websites on the internet such as AssuranceLife.org where you can get burial insurance quotes.

Which Is Right For You?

Its really a decision that is up to you however I would recommend a combination of both depending on your age and needs. The reason for this is because you are always going to have cost that are going to be inevitable when you pass on (funeral, taxes, misc) and your term life insurance is more than likely will have expired and you will not be able to qualify for a new term policy (remember only about 1% term policy are paid out). To truly find out what is right for you it is best to contact an licensed independent insurance agent to do a free needs analysis to assess your situation.

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