What is the Best Type of Life Insurance for Me?

You’ve arrived at that time in life when buying life insurance makes since. You’ve done your homework and now understand how life insurance works. In fact, you may have already done the math and determined how much life insurance you’ll need. What is still uncertain is what’s the best type of life insurance for you.

Shopping for life insurance is an important part of your financial plan. Your protection needs to consider both your present and future finances, as well as the future security of your family or loved ones. Moreover, each person’s plan will be a bit different as goals are unique. What is typically constant, however, is that you want to provide protection for your family (spouse, children, or even older parents), pay off debts (mortgage, credit cards, and loans), or fund an inheritance.

So, let’s jump in and get some basic understanding of life insurance policies, and see if we can help determine what is the best type of life insurance for you.

What are the different types of life insurance?

Generally speaking, there are three types of life insurance available. Term life is a popular choice and what many think of when they first consider buying life insurance. But you can also get permanent life, offered in whole life or universal life options. There is also an option strictly designed for end-of-life.

So, let’s take a bit deeper look at each of these options:

Term life: If your goal is to provide financial protection to those dependent on your income until a specific time, then term life insurance may be the right option for you. Term life allows you to select the term length of your coverage from five to 30 years. However, when that term has ended or expired, your coverage stops—unless you renew (likely at a higher premium) prior to expiration. Time, amount of coverage and affordability are typical reasons for selecting this option.

Final expense: This is also referred to a burial insurance. If your goal is to simply secure coverage for end-of-life expenses, then a final expense policy may be a the right type of life insurance for you.

Permanent life: If you’re not looking to have coverage for a specific time period, and want coverage for your entire life, then you should consider a permanent life insurance policy. Additionally, if you want a policy that has a cash value (with cash withdraw options), this may be the right choice. Moreover, if leaving an inheritance or estate planning is one of your goals, then the lifetime benefit and cash value make this option a better choice for you.

How long will your loved ones need coverage?

If time is the question, and you’re asking “how long,” then you may be best suited with a term life policy. Term policies do offer relatively more affordable premiums, and can be used to strategically cover specific time-based events or needs.

If your concerned with having coverage for a specific time, then consider these questions:

• If you have family or loved ones who depend on you for financial support, how many years would they need this support to maintain their lifestyle?
• Will you have sufficient retirement funds to support your family past your productive years?
• Will your children require child care or need tuition support? If the answer is ‘yes,’ did you consider college expenses? How long will you need coverage for all these needs?
• If you have a mortgage or business loan, how long will you need to cover that balance?

Estate planning and inheritance

If your primary goal when looking into life insurance is leaving an inheritance or estate planning, then permanent life insurance may the right choice for you. Because a permanent policy lasts your entire lifetime (as long as you pay the premiums 🙂 ), then it is more suited to estate planning. Buying permanent life insurance means that your family can receive the death benefits regardless when you pass away. Therefore, without having time-based consideration, when buying permanent life you can focus more on the expenses you’d want to pay off, plus how big of an inheritance you want to leave.

The bottom line

While these tips do help to provide some perspective on your life insurance needs and how the different types of policies may fit into those priorities, you will have unique goals. Consulting a financial planner, wealth management consultant or life insurance agent is always a good way to get the right type of life insurance policy.  Remembers, it’s always best to secure a policy sooner rather than later—this helps you get more affordable premiums and to more quickly ensures those you care about are protected.

What to know how much it might cost? Get a life insurance quote online to compare prices. Then, talk to an expert agent, ask your questions, and be confident that you can get the best policy for you.