How to Choose the Right Life Insurance Policy

In Life Insurance by Keith

Choose the right life insurance policy for your needs and budget.

Term Insurance vs. Permanent Insurance

Consider Term Insurance for:

Short term needs:

    • Term insurance allows you to pick a certain amount of life insurance for a defined benefit period. i.e. 10, 20, or 30 years.

Large insurance need but very little budget:

    • Term insurance is by far, the least expensive life insurance. The rate per $ 1,000 is significantly less than permanent insurance.
    • For example, you have children that cannot provide for themselves over the next 15-20 years. Or you have a business and need to cover a debt for the next ten years. Term life insurance is a great way to ensure that your family and/or your business can remain financially viable.

Don’t forget convertibility:

    • A lot of insurance companies today allow you the option of converting your term life insurance policy to a permanent policy down the road.
    • Why is this important? Say you take out a 30-year term policy when you are 28 years old and in excellent health. By the time you reach 55 years old, you may have developed diabetes, high blood pressure, or maybe you’ve put on a few pounds. You can’t get the same medical rate that you did when you were 28. But, with the convertibility option, on your policy you don’t have to worry about what your health looks like at age 55. With the convertibility option, the insurance company will allow you to convert your term insurance policy into a permanent life insurance policy with no medical questions or exams and give you the same health rating that you received when you were 28 years old.

Consider Permanent Insurance for:

  • You want the life insurance for as long as you live.
  • Final expenses.
  • You want to pass a legacy on to your children or grandchildren.
  • You want to leave your church or favorite charity with an endowment.
  • Keep in mind, permanent life insurance is more expensive than term insurance. However, if properly set up, your premiums and death benefit can never change.
  • One final note, I have never met a single person that said I bought too much permanent insurance. I have heard on many occasions, “I wish I would have bought more permanent insurance when I was younger”.