In What Type of Insurance Do I Need


Are you thinking about purchasing life insurance, but aren’t sure where to start? One of the more commonly asked questions we get here at Low Cost Life Insurance is “which of the following best describes term life insurance?”

  1. The insured is covered during his or her entire lifetime.
  2. The insured pays the premium until his or her death.
  3. The insured pays a premium for a specified number of years. 
  4. The insured collects interest on the value of the policy.

The answer? Choice #3. Here’s why:

Term life insurance has a set duration

Unlike answer #1, term life insurance policies can range anywhere from one to thirty years. This is great, as you get to specify the exact amount of coverage you want, and the length of time you most need it for. On the other hand, whole life insurance covers you for your entire life, but will end up having a larger financial cost associated with it.

Term life insurance covers you during the most important years of your life

The best time to open a term life insurance policy is when you’re expecting to make a big life decision. Starting a family, getting married, starting a business, or switching to a profession where danger is involved are all great reasons to take out a policy. Having a term life policy protects you and your loved ones during these years, and means that later in life you’ll have the choice as to whether you want to continue your policy, or stop making payments.

Term life insurance allows you to save money and place it into other accounts that will grow

With answer #4, a whole-life or universal life policy both offer a cash-value savings account that is tax deferred. This means that you’ll slowly accumulate money, the longer you hold the account. However, we still believe a term life insurance policy will benefit you the most. It is better to place additional income into stocks, bonds, mutual funds, and an IRA, than to hold it in a savings account. Interest rates for savings accounts are often quite low, and overall, it just isn’t a wise investment. Check out this article from WhiteCoatInvestor for more information on how non term-life policies work.

Do you have additional questions on term life insurance policies, or what is best for your family? Send us an e-mail or give us a call. We’re happy to lend a hand, and can even provide you a free quote!