Many people don’t like talking about life insurance because 1) the thought behind life insurance is morbid and 2) the purpose of life insurance is sometimes confusing if you don’t know your families financial needs. For instance, it’s a common misunderstanding that life insurance is for investment purposes. The fact is, most people don’t need to invest in life insurance – their needs are much simpler than that.
Now there are some types of permanent life insurance policies that act like investments because they build cash value. But these types of policies really aren’t an economical way to invest your money. There are only a few times when permanent life insurance should be considered, such as in estate planning or asset protection situations. But for most of us, life insurance has one purpose – income replacement. That’s it.
Once you determine the purpose of life insurance, making a buying decision becomes much easier. If your purpose is income replacement, buy term life insurance.
Term life insurance is pure insurance. There is no cash value attached to the policy. And unlike permanent insurance, which provides lifetimes coverage, term life only covers you for a specified period of time – the term. The other big difference is the price. Term life insurance is usually 3 to 4 times cheaper than permanent insurance.
So after you determine that term life insurance is all you need, both financially and economically, ask yourself the following two questions:
- How much life insurance do I need?
- How long do I need it?
To answer these questions, talk to your family and use AccuQuote’s term life insurance calculator. If you have questions about which type of life insurance is right for your family’s situation, talk to a licensed life insurance professional today.
Tags: Life Insurance
Posted in Life Insurance | |