When selecting a life insurance policy, what options do I have?
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Asked September 23, 2013
The first option when buying life insurance is to decide what type of policy you need. The two primary types of insurance are term life, which is valid for a specified number of years, and permanent life insurance which remains in effect until you die or the policy matures. Term life policies are good for making certain that family goals can be met, and permanent life policies are useful for taking care of your family and handling long-term life goals. For example, a term life policy might be used to pay off the mortgage and make sure there are tuition funds for your kids, and a permanent life policy would be used to provide living expenses for your spouse after you pass away.
If you choose a permanent life insurance policy, you will have several additional choices. Permanent life policies can be as simple as final expense policy that pays directly to a funeral director, or they can be as elaborate as a universal variable life policy that allows you to manipulate how the premiums are invested. The more interaction the policy allows, the greater the potential for gain and whole life policies will always pay the face value regardless of how your financial planning performs.
If your insurance agent offers it, you might want to consider adding a future purchase option to the policy you buy. This would allow you to increase the amount of coverage at a later point in life, often without regard to changes in your health since purchasing the option. This is a policy rider and will include an additional premium.
Another important option to consider is a disability waiver of premium. If you become unable to work for a period of time, this rider would pay your life insurance premiums for you, keeping the policy in force. There are differing levels of disability coverage available, ranging from partial or temporary disability to full disability. The additional cost will be based on your health and the level of coverage you purchase.
Answered September 23, 2013 by Anonymous