.Which Type of Life Insurance Should I Buy?

Life insurance can be one of those taboo topics. Every time I bring up life insurance in conversations, I can always expect responses like these: I wont die prematurely, it costs too much, and why do I need life insurance. These responses are understandable; however, I think people can sometimes let their misunderstanding of a financial product stop them from doing what’s best for themselves. Ask anyone who has been deeply affected by a premature death in their family and had term life insurance or whole life insurance, they will all tell you the same thing, it came in to save them at a time when they needed help the most.

Make the following considerations when choosing what type of life insurance fits you best:

1. How much life insurance do I need – this is determined by two things. Firstly, your immediate need at death to cover things such as your mortgage balance or final expenses. Secondly, the continuing needs of your loved ones, most people want their income to continue to their family for a set period of time.
2. How long will I need life insurance – term life insurance is best utilized to take care of your families continuing needs because after your working years you don’t have an income to replace. Permanent life insurance is best utilized to cover your immediate needs at death because odds are you’re going to live into retirement.
3. Do I want to use life insurance as an investment – some people will use life insurance as an investment if they want to leave a legacy for their family. Some permanent policies have an investment component that grows tax-free, and pays out tax-free, making it a very effective estate planning tool.
4. What’s my budget – the most important thing is to make sure you have the right amount of coverage. Some people fall in love with the permanent nature of whole life insurance policies and sacrifice some coverage, which isn’t always the best thing to do. Generally, premiums are higher for life insurance in this order, accidental death, term, universal, permanent. Each product has trade-offs between premiums and features.

All financial products are tools that need to be used the right way in order for them to be an effective part of your overall financial plan. The best way to know what insurance is right for you is to contact one of our Hero’s today. They can do a personal needs analysis with you and recommend a specific product based on your needs.