Taking out life insurance is a way to protect your family if something suddenly happens to you. It’s not a topic many people like to think about. Still, it’s critical, especially if your family depends on your income. Plus, getting an insurance policy is an investment into your future, and you’ll find it can improve your investments. It’s not an unnecessary expense, as long as you choose the right policy for you. Understanding the different types can help you make the right decision so you can have peace of mind that your family will be provided for.
What if You No Longer Need the Coverage?
The decision to purchase life insurance can be a big one, and you may worry that you will be stuck with a policy that you no longer need. Or you might already have a policy and find that another one would suit your needs better. Regardless, you can sell the policy you no longer need. It’s not hard to estimate the cash value of a policy, and it only takes seconds. That way, you can see how much you might get if you choose to sell it.
The Advantages of Term Life
One of the main reasons to choose this type is that it does not cost as much. It does not have a cash value, but it does pay out a death benefit, making it more affordable. If you are young and healthy, you might pay less than $20 a month for the insurance. Other types tend to come at a much higher rate.
Your insurance needs likely won’t last your entire life, so term life is often perfect. For instance, perhaps you have kids at home and want to make sure they are provided for. In that case, you could get a policy that lasts until they are grown and have left home. Sometimes, employers offer term life plans, although the coverage can vary. Still, you might find the coverage rate is lower than getting your own, and in some cases, the employer will cover the cost of the policy. Sometimes, these benefits are also tax-free.
The Advantages of Permanent Life
These policies offer death benefits as well, but they also have some more features. For instance, they offer protection for your entire life, not just a few years. As long as you keep the premiums, the coverage can last for the rest of your life. That is advantageous if you have health issues when you are insured that might stop you from getting another policy later.
You can also get cash value from this type of insurance. The value grows tax-deferred, meaning you don’t have to pay taxes on that portion yet. Once you have enough cash value, you can withdraw from it or borrow against it. Just make sure you understand the implications of doing so on your policy before doing so. The death benefit and premiums might be flexible since permanent life sometimes lets you alter the payments or change the death benefit. Still, you might need to show proof of insurability when doing so.
