I’m a Certified Financial Planner with Finance Companies. And today I’m going to talk about how to buy life insurance. There are two main type of life insurance policies that you’re going to want to consider when deciding to buy a life insurance policy.
The first is a term policy. The second type of policy is either a permanent or a whole life policy. On a term life policy you’re buying insurance, pure insurance for a set term, and the terms can range anywhere from ten to thirty years.
And really what you’re going to be doing is paying premium for a set amount of death benefit, for example fifty-thousand dollars, you’d pay an annual premium every year for a set term, let’s say twenty years, and at the end of twenty years your policy is done, there’s no more insurance coverage, and there’s no more premium due.
You’ve bought a policy for a set term, the term is done, you can buy a new term, you can buy a different type of policy, but that’s what that policy is designed to do, is to provide death benefit coverage for a certain term. The second type of policy is a permanent or whole life policy, and that policy does what it says, it’s a policy that will cover you for your entire life.
They’re usually more expensive than term policies, the benefit of a whole life policy is that you’re not only paying for pure insurance, so for example a fifty-thousand dollar death benefit, but part of your premium is also going to be going into some sort of a cash a value account.
The policies get fairly complicated, and there are lots of bells and whistles to them for example you can invest in underlying mutual funds, you can invest – your policy can be designed specific ways, for example a fully paid up policy at age sixty-five, you could increase or decrease the death benefit.
There are a lot of different things you can do with a whole life policy that is very flexible, but the real main difference is that it is going to provide you with life insurance coverage until you die, throughout your entire life. They are a little bit more expensive than term policies, and there are a lot of options available for both types of policies.
You would probably want to go online and see if you can get some quotes, but really once you decide to purchase a policy, you’re probably going to want to work with a really good life insurance agent who can walk you through the differences and help you decide the amount of insurance that’s right for you and try to find the right policy for you.