Now that you’ve crunched the numbers and learned the lingo, you need to think about which type of life insurance policy suits you best. There are two basic categories of life insurance: term insurance and permanent insurance (sometimes called “whole life”).
Term insurance is generally less expensive and easier to qualify for because it has a fixed coverage period, say 10, 20 or 30 years after which it can be renewed. It’s great for things like covering your mortgage until it’s paid off (and it’s usually cheaper than mortgage life insurance that the banks offer). One way to think about term life insurance is that it is for situations where you hope you never need it.
Permanent insurance is designed to last your lifetime (hence the “whole life”) and is guaranteed. Depending on the options you choose, permanent life insurance can increase in value over the years and can even be used as collateral for a loan. It will probably cost more per month than term insurance, and might be harder to qualify for, but because it’s guaranteed, you can use it to help plan your estate.
You need an insurance advisor to help buy permanent life insurance, but the process can be done completely online if there are no medical tests required. If this sounds like the best option for you, or you’re just not sure, you can start here by finding an advisor to speak with. Most life insurance advisors don’t charge you any up-front fees and can help you determine the right coverage for your needs and budget.
Next week we’ll cover the last question – who is the right insurance provider for you.