Which Life Insurance Plan is the Best Fit?

If you’re wondering whether or not you should buy life insurance, ask yourself this one question: “Would my death leave anyone in a financial bind?” If you answer “yes”, it may be time to get serious about shopping for life insurance. It can offer peace of mind, ensuring that your debts or loved ones will be taken care of in the event of your death. But before you buy it, you need to ask yourself if you’ll qualify, and whether you should purchase term or permanent life insurance.

Term life insurance is pure insurance protection that pays a predetermined sum if the insured dies during a specified period of time. On the death of the insured, term insurance pays the face value of the policy to the named beneficiary. All premiums paid are used to cover the cost of insurance protection. Permanent life insurance provides lifetime protection (does not expire), but the premiums must be paid on time. Most permanent policies offer a savings or investment component combined with the insurance coverage.

Is term or permanent insurance your best buy? It depends. A Focus may be inexpensive, but it doesn’t mean it is the model that’s right for you. And term life insurance may be inexpensive, but not necessarily your best buy. Why? Because a slight savings in price isn’t everything when making a long-term decision; value is often the bigger consideration.

If you just need life insurance protection for a limited period of time, such as covering a 10-year loan for a business, term life may be perfect. But buying life insurance to protect your loved ones, spouse and children, doesn’t usually end when the kids leave home. Your spouse may be in trouble if you died without adequate life insurance after the kids are gone and you’re still years away from retirement. Or during retirement, many older couples worry about the effect of their pension and Social Security amounts reducing when one of them dies and the healthy survivor has years left to live – but now with less income and fewer assets. Try explaining to a spouse that at retirement your group life insurance immediately reduces 50%, and at age 70 another 50%, a typical provision in many group contracts. You’ll just buy more? It may be cost prohibitive due to your older age, or due to a few so-called minor health issues that you’ve developed over the years. Realistic? Yes. It happens every day – health issues or age making the purchase of additional life insurance cost prohibitive.

Yes, the effects of some decisions aren’t nearly as apparent until years later, when it’s too late to correct a bad decision. Don ‘t live with regrets. Permanent insurance isn’t nearly as expensive today, as it use to be. Some permanent type insurance policies may actually be less expensive than older term policies. When’s the last time you compared? You might be pleasantly surprised at the new choices available. The facts make it easy to evaluate your decision.