Smart financial planning involves taking the time to make sure that the family’s assets are maximized to their fullest extent and protected. One of the ways that you can make sure that your family is protected in the event of an emergency is by purchasing a life insurance policy. Life insurance will provide coverage and help to prevent financial hardship for the surviving family members.
Let’s take a look at the two most common types of life insurance:
Term Life Insurance
Term life insurance is the easiest form of life insurance to get. Term life insurance can be purchased from any major life insurance carrier and can last for as short as a year or for 30 years. It is up to the policyholder and the insurance carrier to decide on the term of the policy. One of the reasons why term insurance is so popular is because it is so affordable compared to other life insurance policies. Term insurance is the cheapest insurance that you can get since it does eventually expire at some point and time, and benefits are only paid if the insured dies before the term of the policy is up. Term insurance can get more costly if you need to buy a policy at an older age.
Whole Life Insurance
Whole life insurance is a more expensive version of life insurance but it comes with a whole lot more benefits. Whole life insurance can be more expensive when you are younger but can also cost you less as you get older. One of the big advantages of whole life insurance is the fact that it comes with a guaranteed death benefit and the policy also has a cash value. You can borrow against the policy or sell the policy based on the cash value built up. This keeps you from losing all of your money if you choose to let the policy lapse. Then again, if you are looking to cut costs and/or aren’t concerned about having a permanent policy, you may want to avoid whole life insurance policies altogether.
In the end, choosing the best insurance policy for you will depend upon your budget and your needs.
Photo Credit: Phillie Casablanca