Life Insurance
There are many kinds of life insurance, but they generally fall into two categories: term insurance and permanent insurance.
Term insurance is designed to meet temporary needs. It provides protection for a specific period of time and generally pays a benefit only if you die during the term.
Choose term life insurance if you:
• Support dependents such as children or a spouse
• Pay the mortgage for your family home
• Want insurance coverage for future college costs
• Prefer flexibility and control over your retirement investment
With term insurance, you get the most coverage for the least amount of premium. Term coverage allows you to separate the money you spend on life insurance from the money you spend for retirement savings and potentially, more promising investment vehicles.
In contrast, permanent insurance provides lifelong protection. Permanent life insurance makes sense if you either anticipate a lifelong need for life insurance benefits or want to use the policy as a means of investing for retirement through "forced savings." As long as you pay the premiums, and no loans, withdrawals or surrenders are taken, the full face amount will be paid.
Choose permanent life insurance if you:
• Have an estate to protect on behalf of your heirs (the death benefit can cover estate tax expenses)
• Have a disabled child or lifelong dependent;
• Can commit to the policy long term.
It's impossible to say which type of life insurance is better because the kind of coverage that's right for you depends on your unique circumstances and financial goals. Life is not static, so it's prudent to evaluate the amount of life insurance each year to ensure it addresses ever-changing needs. A great thing about life insurance is its flexibility to address the full spectrum of life events that may adversely affect a policyholder's standard of living.