You have heard the term “life insurance” all over television. You may have life insurance through work. You have probably had someone call you about their life insurance rates. Before you consider purchasing a policy of your own, you probably would like to know if life insurance is a fit for you. There are several deciding factors on whether a life insurance policy would be a good fit for you. Let’s look at a few.

What does it do?

Life insurance pays the designated beneficiary the face amount of the policy upon the death of the insured. In other words, you pick an amount of coverage when you set up your policy and it is paid out to the beneficiary when you die.

Different Types of Policies

There are many kinds of life insurance policies, but we’ll break this down into two basic categories.

Permanent (Whole Life)
Permanent life insurance is much more expensive to purchase per $1,000 of coverage. The most common form of permanent insurance is known as whole life. Permanent insurance stays in force if you pay your premiums. You also have an opportunity to lock your premium in permanently.  

Term Life
Term life insurance means you select your coverage and the rate will be guaranteed for an agreed upon period. If you purchase a $300,000 policy for 20 years, then after 20 years the policy will essentially become unaffordable. You have options at the end of your term, you can let it expire or convert it to a whole life policy. Term life is much more affordable than whole life.

Which is better for me?

Each type of policy has its place. It really depends on why you need life insurance. If you have a mortgage, kids, debt, spouse, etc… you probably need a lot more insurance than your budget will allow in the form of a whole life policy. Term provides you with a very affordable solution.

If you need to ensure your final expenses are taken covered and you don’t want to worry about a term expiring in your 60s or 70s (essentially making it unaffordable) then a smaller $15k-$25k whole life policy would be sufficient to pay for final expenses.

Each case is unique. It is best to discuss your plans with a professional at Carter Family Insurance. We work with several of the top companies in the nation to make sure you get the best value to fit your needs. 

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By Seth Carter, October 30,2019

Should I buy Life Insurance?