If you're the head of your household, it's never a bad time to prepare.
Life is a series of questions. There are the little ones, like what should I wear to the park or what movie should I rent. There are the bigger ones, do we need a new car or where are we going this summer. Then there are the ones that keep us up at night, like what happens if I don't wake up tomorrow? Pondering your mortality leads you to the kitchen for a glass of water. On the way, you peek into your child's room. Fast asleep. What about them? Will they be okay?
This is something millions of Americans deal with every day. The obvious answer is life insurance.
But is it so obvious? With so many different plans and so many different options and opportunities out there, it's important to find a plan that works with your budget that gives you and your loved ones the security you need. There are plenty of options, but the first decision made boils down to a single decision regarding the type of coverage you buy. Let's take a look at the options:
What is Term Life Insurance
First, there's term life insurance. This coverage pays out with a pure death benefit, providing coverage of those important financial responsibilities like expense of funeral, debts, mortgage, and cost of college for your children, This type of insurance is cheaper because it is bought in increments. Term life insurance can be bought for ten to twenty years, typically serving to protect you and your loved ones while a retirement cushion can be built. Since only about 2-3% of all these policies end up paying out, they tend to be more inexpensive with more coverage per premium dollar. You can renew terms when yours expires, but your rate may increase as you get older.
What is Whole Life Insurance
The other main option is whole life insurance. This coverage is intended for the long run, guaranteeing payout to your beneficiaries on the event of your death. The premium will never increase or decrease, and can be paid monthly, quarterly, annually, or all at once. Whole life insurance gives a cash payout, providing for loss of income as well as whatever other life opportunities you want for your loved ones.
It can be a complicated decision to decide which is best for your family and situation, so let's compare the two. Term will cover whatever 10, 20. 30 year period you pay for, which is ideal for people with children still in school or beneficiaries that are unable to support themselves. Whole life however, covers your life guaranteed. You die, your beneficiaries get paid. This is useful for those with large estates, as the money from the cash value can go toward paying the estate taxes. Term has a changing premium, increasing as you age (to cover mortality, as older age groups have higher mortality rates than the younger ones). Whole life however, will have the same premiums from the day you buy to the day that you die.
If you're still unsure about which coverage is best for your situation, there are resources available to you. You can talk to your insurance agent and get a quote while discussing your life, health, and beneficiaries level of need. You can use an online calculator to find a rough cost for different types of insurance. Most financial institutions have kits available to mail out, should you want to sit down with a spouse or loved one to figure things out.
The important thing is to get covered. By purchasing a life insurance policy, you'll be able to fall asleep at night knowing that the loved ones surrounding you will be taken care of in the event of your passing. That feeling of security and comfort is a bonus value that comes with the price of your insurance plan.
No matter what life insurance policy you choose to protect your family, shop around and compare plans to get the best possible price. Use the online tool to get fast quotes from a group of providers in your area. You can perform a side-by-side comparison of plans and premiums. To get started, just enter the information requested on the form. Submit the form and receive a list of providers in your area.
Please note: The goal of this website is to provide basic information on life insurance. The contents of this website should not be interpreted as legal advice or view. The information contained here is meant exclusively to give a basic indicator of feasible available insurance plans and doesn't represent a solicitation to enter a transaction.