Choosing a life insurance plan can be intimidating, but it’s a vital part of your family’s financial plan. Life insurance is there to protect your family in the event of your death and reduce the financial burden of income loss. Thinking about this can be difficult, but choosing a plan can help you and your family be prepared and bring you some peace of mind.
Before choosing a life decision plan, it is important to take into account your personal situation in order to determine which will be best for you.
Things to Consider:
- Do you have money saved to support your family, such as an emergency fund or retirement savings?
- How much coverage do you need?
- Do you have young children?
- Are others financially dependent on you?
- Are you in good health?
- Do you have any outstanding debts?
- Do you have a plan for your funeral expenses?
- Do you want to leave an inheritance?
- Do you want to donate money to charity?
Once you have your finances determined, it’s time to discuss your options. There are two main types of life insurance: Term Life Insurance and Whole Life Insurance.
Term Life Insurance
Term Life Insurance provides coverage for a determined period of time – typically between 10-30 years. Your policy automatically expires after this set time, and it only pays a fixed amount of money out to your beneficiary if you die during the term of the policy. You can also choose to renew the policy at the end of the term. Term life insurance doesn’t hold a cash value, but it is also the most affordable option. This is the best policy if you need coverage for a specific amount of time – like if you want to ensure your child’s education will be funded provided the worse should happen.
Whole Life Insurance
Whole Life Insurance, unlike Term Life Insurance, never expires. While it is more expensive, once your premium is paid out, it is split between the death benefit and cash value. You can use this cash value to fund your retirement or for any other expense that you may need to pay. This policy is best if you need life insurance for all of your life, and not for a specific period of time. With whole life insurance, the premium remains the same, the cash value grows at a guaranteed rate and the death benefit is guaranteed.
In short: term life insurance offers a low premium, but you only have coverage for the specified time of the policy. Whole life insurance offers you lifetime coverage and you have an added cash value component, but it comes at a higher policy premium.
If you still have questions about which plan is right for you, our consultants are available to go over your options. Talking with a financial planner can help to figure out what life insurance best suits your needs. Call Care Financial today to speak with an insurance expert and let us help you decide on the right life insurance policy that fits your needs.
