Life insurance is something that people of all ages often consider when making financial planning decisions. Whether you are 35 or 65, giving security to your loved ones could be of interest to you. That being said, the question of whether it is worth the cost exists. There are a lot of factors to consider when you are thinking about getting life insurance, from the type of policy to amount of coverage to the length of your term.
Types of Life Insurance
Term Life Insurance
These types of policies insure you for a set amount of time. Most terms are set to end around the age of 60, with the option of upgrading to permanent life insurance. Term life insurance policies are more similar to other types of insurance; they are there for the possibility that you would need to use them. The only way to guarantee some of your money back is to choose a Return of Premium (ROP) life insurance policy. This type of term life insurance allows you to get some of your money back at the end of the term, no matter whether the holder has passed away or not.
Compared to permanent life insurance, term policies have considerably lower monthly premiums. The younger and healthier you are, the lower your premiums will be, which also can make the risk less if you are worried about not having to put in a claim.
Permanent Life Insurance
These policies will cover you for life as long as you are paying your premiums; your beneficiaries will get the death benefit after you pass, whether it is untimely or not. Permanent life insurance is ideal for people who will have dependents indefinitely, such as children with disabilities or other family members in their care.
Permanent life insurance policies allow you to borrow against the cash value, so you can use money saved in these policies to pay for college expenses, a house, etc., without a penalty. They also accumulate tax-deferred growth, meaning you don’t pay taxes on the money as it grows, similar to a 401(k) or an IRA.
This kind of life insurance comes with higher monthly premiums than term life insurance, so it doesn’t benefit all situations. If you have a permanent policy and end up surrendering it or passing away with loans accumulating on the policy, it can leave penalties and implications on your beneficiaries.
Advantages & Disadvantages
Advantages:
- Accelerated Benefits
Some life insurance policies allow you to use some of the benefits before death in the event of a medical condition. This early payout can help with medical bills and even quality of life before passing, which can help lessen potential debt from accumulating when it doesn’t need to.
- Peace of Mind
The largest benefit for anyone looking into life insurance is the security that their loved ones will be financially stable in the event they aren’t around to make sure of this. Between funeral costs, lingering medical bills, or even just living costs after a loss of income, there are so many places your death benefits from life insurance can lessen the burden on your loved ones after you pass. Whether you are young, middle-aged, or even older, if you have people you are concerned about protecting from these costs, life insurance might be worth your penny.
Disadvantages:
- Potential Loss on Investment
Especially with term life insurance, some people don’t think the potential to essentially lose all that money is worth it. Paying into the policy and not receiving the death benefits can be discouraging; even though you will get to celebrate the fact that you didn’t unexpectedly pass, there is no money back from the amounts you were paying. There is no guarantee either way, which is a gamble that you have to decide if you are willing to make.
Compare Policies Today
Coastal Insurance Planning can help you find your life insurance plan. Reach out to our knowledgeable agents for help in finding the coverage that fits both your needs and your budget. Schedule an appointment or call us at (540) 404-3098!