One of the more crucial questions you’ll face as an adult is whether to purchase a life insurance policy. The simple answer is yes, you should—especially if people depend on you financially. Life insurance will help care for loved ones after you’re gone and pay for any expenses you leave behind. That’s why it’s essential to understand a few basics.
General Life Insurance Info
We recommend that married spouses each carry a life insurance policy—no matter their employment situations. We find this necessary because if both spouses work, the loss of one could place a serious financial strain on the other. And, if a stay-at-home parent passes away, the cost of childcare and various domestic needs will significantly impact the family.
Since each family and individual is different, you should select a life insurance policy based on your specific needs. You have a choice of two basic types of life insurance coverage—term or permanent.
Term Coverage
Term life insurance offers protection for a set amount of time. It also provides a death benefit but no cash value, so the premiums are comparatively inexpensive. Plus, the rates are cheaper the younger you are.
You can renew a renewal term policy at the end of a set term, without proof of insurability, but only for a limited number of times. Or you can exchange this coverage for permanent insurance after some time—again without evidence of insurability.
Whole Coverage
Any form of life insurance policy other than term is called permanent insurance, including whole, universal, and variable. If you opt for one of these types, you will get a term life insurance policy combined with a long-term, tax-sheltered savings plan.
The most basic type of permanent life insurance is called “whole.” It offers a lifetime of protection while also building cash value. Then, you can borrow against that value, withdraw it, or use it to cover future premiums.
Choose cash value life insurance coverage if you want a policy for the long haul. It’s perfect for those seeking lifetime protection and who want stable premiums and tax-deferred value. It also offers more coverage than a term option. The drawback, however, is that the rates are typically more expensive.
Choosing Your Coverage
Find the right life insurance policy for yourself by examining your dependent’s current needs and future income and assets. If you need help, an MTG agent can help you determine the type and size of life insurance policy your family will need to cover the loss of your income. Call us today at 800.489.4684 to learn more.