Many people start to think about life insurance for a number of reasons. Some consider purchasing a life insurance policy after a major life milestone, such as marriage or the birth of their first child, while others begin to weigh their options after seeing a close friend or family member struggle financially after the loss of a loved one. A policy could help you provide financial protection for those you hold dear, and there are many types of life insurance available, but how can you determine which one is right for you?
Comparing the different types of life insurance could help you dig a little deeper into your options. You are a unique individual with unique needs, and learning more about term life, whole life and universal life insurance — and their differences — could give you the confidence to decide.
When reviewing the life insurance options available, keep in mind that there's a lot of variety in the market within the categories of life insurance. As with many types of insurance, the price you pay will be affected by your age and health profile. Generally, the younger and healthier you are when you buy, the more affordable the premiums could be.
First, let's examine and compare term, whole and universal life insurance policies:
If you have a new bouncing baby boy, would it be wise to consider a different policy than someone who is entering the workforce for the first time — or close to the golden years of retirement? Well, it could all depend on what you need. There are many questions you could ask that could help you better understand your own insurance coverage needs and decide which type of life insurance could be a good fit for you.
Your life stage could greatly influence the answer to this question. With a term life policy, you could buy a larger death benefit for the same premium amount you would pay for a whole life or universal life policy. This means that if you want $500,000 in life insurance protection — but are just beginning your career and living on a tight budget — some term life policies could be a good option.
Let's say you're married with a mortgage and 9-year-old twin girls. You may need a larger death benefit than a recent college graduate with a rented apartment. In your case, a whole life insurance policy could help provide a death benefit for your loved ones while also giving you the security of cash value.
Now, imagine you aren't expecting any children for a while — but dream of starting a family someday. You might consider a universal life policy, which could offer you flexibility in a changing world. You may be able to increase the size of your death benefit down the road as your family grows and your circumstances change. For the same premium you might pay for a $500,000 term life policy, you could also start building up cash value in a whole life or universal life policy (albeit with a smaller death benefit).
Life insurance is as unique as you are, and speaking with a financial representative could help you evaluate your needs and discover which type of coverage could be right for you. Whether you're heading into an exciting new phase in your life — or reflecting on how you could better provide for the ones you love — understanding and comparing the types of life insurance policies available could make all the difference.