What type of life insurance should i buy?

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Asked October 14, 2011

1 Answer

What type of life insurance policy you should buy depends on the primary reason for purchasing the policy. The three main types of life insurance are term life, whole or permanent life, and final expense coverage. Each one is ideal for certain circumstances, but there are a number of differences between them, which makes it important to understand why you are purchasing the policy before offering advice on which one you will need.

Term Life
Term life insurance is best used to make sure that your family can complete desired goals even if you are not able to be there to make it happen personally. Suggested uses for a term life insurance policy include guaranteeing college tuition for your children, paying off a mortgage or vehicle loan, or providing the funds for your family to move to a different location after you die.

Whole Life
Whole life comes in several varieties and under different names, such as permanent or universal life insurance. No matter what name is used, whole life insurance is generally purchased relatively early in life, and has the advantage of acting as a personal financial tool as well as a life insurance policy. As you pay the premiums, the accrued cash value increases and that value can be borrowed from, providing you with an interest-bearing savings account that can be used when and where it is needed. Some types of whole life insurance allow the policyholder to make decisions about how the money is invested, which has the potential to make a policy worth considerably more or less depending on your choices for investments and the general market behavior.

Final Expense Life Insurance
As the name implies, final expense insurance is intended to pay for the funeral and other costs associated with laying a loved one to rest. In many cases, final expense insurance is coordinated with a chosen funeral parlor, but it is also possible to purchase a stand-alone policy that allows you to choose the beneficiary. Unlike other types of life insurance, this form rarely pays out to any person or institution other than the one responsible for the burial and other funeral costs. The advantage of final expense insurance is that it is available for older people or those with medical conditions which life insurance companies are reluctant to write "regular" policies for.

Answered October 14, 2011 by Anonymous

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