How To Choose What Type Of Life Insurance Is Best For You
How do I choose what type of life insurance is best for me?
There's various types of life insurance policies today. There's term-life insurance, which is a very popular type of insurance. It's very inexpensive – because it's just pure insurance – it insures you for 10, 15, 20 years, 30 years, and then it becomes really expensive, but a lot of people don't really care what happens 30 years down the road, they only care about the next 30 years. While their kids are young, or going to college. And, one the kids are grown or out of the household, and once the mortgage is paid off, they have a feeling that they won't even need life insurance. For people that have a more mature opinion or more mature view of life and say, I love my spouse and kids today and I'll probably love them forty years from now, and I don't want to have a life insurance policy that becomes so prohibitively expensive that I can't afford it. And, I'm willing to pay a higher premium now so that I don't have increasing premiums later on. So, a whole-life policy has premiums that stay level today and never, ever go up – guaranteed. Because I'm paying a much higher premium for that type of policy, the insurance company gives me some bonus points – number one, they give me cash values. The cash values in the policy can be used for loans, for emergency situations, they can if you want to surrender the policy after many years – you don't need the insurance. It's a windfall for some people. The other type of insurance that people are getting today is universal life. That's a hybrid between term insurance and whole life. It's term insurance with a bank account attached. And, the bank account at the insurance company earns a certain interest rate, and over time, they hope that the premiums will stay level – hope – they project that the premiums will stay level for a lifetime. But, if the interest rate of this bank account isn't sufficient, it's possible you'll have to come in with a lot higher premiums at a later date. So, you're hoping that the company will be profitable and will be able to maintain mortality expenses very well, and they might be able to give you a lower premium. So, when I have a client that wants life insurance for 10 or 15 or 20 years; term insurance is the best purchase. When I have somebody who says – I want life insurance guaranteed to be in force, even if I live to be 100; I usually recommend whole life. If I have a person that says – I want insurance that probably will be in force 20 or 30 years down the road, that person probably will be a purchaser of universal life insurance.
