Buying a life insurance policy? Great & wise decision indeed! However, it is equally important to choose the right kind of life insurance for yourself to avail maximum benefits in future.
Here are some tips for you that would help you determine the type of policy that you must settle for.
Term Life Insurance
We would strongly recommend you to choose a term life insurance if you desire to insure yourself for a stipulated tenure of time. A term life insurance facilitates you to keep up to the length of the term policy as is required.
For instance, you have children & you are looking for a policy that would ensure that funds would be paid out for their higher education; it would be wise on your part to buy life insurance for 20-year term.
In case you desire to pay off a debt via insurance, buy a term policy for the specified time period it needs to given, without giving a second thought.
You may also consider a term life insurance policy, in case you have a limited budget & desire to buy a big amount of life insurance. Generally, this type of insurance gets paid only in case you do not continue to live during the tenure of the policy. Hence the rate per thousand of death benefit is less than required for other permanent types of life insurance. In case you remain alive when the term ends, the coverage automatically discontinues unless you decide on renewing the policy.
Here, you would not be building equity like permanent insurance as cash savings. Try choosing ‘convertible’ term policies in case you think that your financial requirements will change.
Convertible term policies offer you an access to convert permanent insurance without a medical examination in exchange for higher premiums.
Remember, that premiums are lowest when you are young & tend to increase on renewal as your age advances.
Permanent Life Insurance
You require life insurance the period you continue to live. This type of a policy would increase the savings amount for you. These would rise on a tax-deferred policy and could be a source of borrowed funds that you can utilize for many reasons.
There are several types of permanent insurance policies such as whole life insurance, universal life insurance, variable life, and variable or universal life.
The key is to determine your requirements prior to deciding on a type of insurance policy.