What type of Life Insurance Should I buy?

It depends on what your purpose for buying the insurance is. If you want to ensure that your family receives a death benefit regardless of what age you pass away, you should consider purchasing Whole Life Insurance or Universal Life Insurance.

Whole Life is a permanent insurance policy which provides life long protection. With Whole life, you pay a “fixed” premium for the life of the policy. This policy includes a cash value. The cash value is designed to grow and is guaranteed. The interest credited in the policy is tax-deferred. Whole Life policies are generally more expensive than other options available today.

Universal Life is also intended to be a permanent policy, however the interest factors and cash value growth are “assumed” and not always guaranteed. With Universal Life, the policy is “designed” to fit the specific needs of the insured, however if the interest and cash value fall short, the policy could require a change in the planned premium or death benefit. Recently, companies began offering “secondary guarantees” to their Universal Life policies, guaranteeing that the death benefit will not change even if the cash value is exhausted.

For individuals looking to insure themselves for a specific length of time such as 30 years, it may be wise to look into purchasing a Term Life Insurance policy. This option is sensible for individuals who are looking to make sure that if they were to pass during their working years (up to age 65), their family would not suffer financially. Term Life is usually purchased at a fixed or level premium, meaning that the cost of insurance is spread out over the term chosen and remains the same for the entire life of the policy. If the insured dies during the specified term the beneficiary will receive the full death benefit. If the insured lives longer than the term policy, the insurance ends at the end of the term unless the company offers a renewal option (often at an extremely high price).

Final expense coverage, also known as Funeral or Burial insurance is another form of life insurance. These policies are designed to cover funeral and burial costs. Most applicants (less than 85 years old are eligible) will qualify and there is no medical exam required. Death benefits range from $1,000 to $35,000.

Accidental Death coverage can be purchased with a traditional life insurance policy or separately. These policies provide coverage when the insured’s death is the result of an unforeseen accident.