No one likes to think about his or her own mortality, but failing to plan for the inevitable can make things very difficult for your family in a time that they are least equipped to handle it. Life insurance is not for you; it is for the protection of those who are closest to you in case the unthinkable should happen.
Understanding the importance of having life insurance and understanding which type of life insurance is right for you, however, are two different things. Even among the same types of plans, things can get very complicated very quickly. When you add in your different plan options, it can be mind boggling.
Two Basic Types of Life Insurance
While there are certainly variations of life insurance plan types, most of them basically boil down to two options: term and whole. Each option has its benefits and drawbacks.
Exploring Term Life Insurance
Term life insurance is the most popular option because of its affordability. You can get far more coverage for a much lower monthly premium with term than you can with whole life. However, there is a price to pay for having term coverage. Once your term expires, usually after 20 or 25 years, you don’t have anything to show for your investments.
Think of it as if you were leasing protection. For a young family, the loss of either parent could be financially devastating. Having a term policy ensures that, should something happen to one of the adult members, the remaining members will have a means for continued financial stability. Once the children are grown and gone, however, this protection becomes less critical and financial security matters less for the family unit as a whole.
Exploring Whole Life Insurance
Whole life insurance is exactly what it says: it is financial coverage that lasts for your entire life as long as you are paying the monthly premiums. It is a type of investment that you could even cash in on if you wanted to for whatever reason, from having a retirement fund to investing in a contractor accounting software company. The drawback is that it tends to be much more expensive than term life.
Whole life may be right for you if you want to retain the investment you have made and have some type of asset. It can be helpful if you want to make sure that your surviving spouse is well cared for or that your children receive a plentiful inheritance. It will help cover the costs of your burial and services and can even go toward paying off any debts you may have left behind.
Either option is better than no insurance at all, but you must decide what works best for your family and your circumstances. The best idea is to talk to an expert about your goals and needs, as well as your means, before making a decision about your coverage.
Michelle is an aspiring writer with a passion for blogging. She enjoys writing about a vast variety of topics and loves that blogging gives her the opportunity to publicly voice her thoughts and share advice with an unlimited audience.
