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What kind of life insurance should I get?

Buying life insurance — ugh.

I get it, aside from having to admit you are mortal, buying life insurance can be kind of confusing. But, hey, you’ve taken the first step. You’re ready to check it off your list and actually do something about it. The next step is figuring out what kind of life insurance is best — time to do some research.ADI Beach

Term Life Insurance 101

There are two main types of life insurance. Term Life Insurance meets your temporary needs and is typically available in 10-, 20- or 30-year terms (referred to as T10, T20 or T30 life products), though other options are available. Premiums stay the same throughout the term but will increase upon renewal. Like with fire or renter’s insurance, term insurance offers peace of mind because you know your assets are covered. But if you haven’t redeemed the policy at the end of the term (meaning you’re still alive and kicking), there is no cash value or benefit. That money you’ve paid is gone. On the up side, you’re still alive.

Term Life Insurance usually offers the most coverage at the lowest initial premiums for a set period of time. The policies are typically renewable and most can convert to a permanent policy. Additionally, term products are excellent alternatives to mortgage protection policies.

Permanent Life Insurance: pros and cons

Permanent Life Insurance meets, well, your permanent needs. There are three types of Permanent Life: Term to 100 (T100) is essentially a term policy that you can’t outlive; it gets paid out at 100 years of age or upon death. It is generally less expensive than the other permanent products. Whole Life is a permanent policy that can include a cash value that grows over the time of the policy. It requires little management; once you’ve made all your equal payments over a specified period of time, your payments are done. Universal Life Insurance combines permanent protection with a tax-deferred investment account, which pays the cost of the life insurance coverage.

Permanent Life Insurance is more expensive than Term Insurance but offers a long-term savings aspect. Additionally, after the initial medical checks you do not need to re-qualify for coverage. And Permanent Life is more flexible in terms of making changes to coverage.

Other factors to consider when choosing life insurance

Budget is typically the biggest determinant when choosing life insurance. Length of term, age, family and health circumstances also come into play. You need to consider both your current circumstances, such as buying a new home, and your future needs, i.e., paying for your children’s education.

Permanent Insurance or Term Life Insurance: which is better?

Unfortunately, there is no simple answer. Every person’s circumstances are different. Many people end up with both types of insurance at various points in their life. Whichever route you choose, I would suggest going for the longest term available, it will typically save you money in the long run.

ADI Benefits offers all these products, so if you need help in deciding which option is best for you and your family, feel free to get in touch.

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