A question that Balanced Care often is asked is “How do I know what kind of Life Insurance to get”? To answer this question as simply as possible, there are several kinds of life insurance, however, they basically fall into two categories – Term and Permanent.
Term Life Insurance is the most affordable type and is designed to cover a specified “term”. Normally, this term would be anywhere from ten to thirty years. This type of insurance would make the most sense if your need for the death benefit would decrease and/or disappear after a period of time. Examples of this would be to cover a mortgage or to cover college costs of children. When either the mortgage is paid off or the children are done with college, the need is no longer there.
Although term insurance is the most affordable, one must be careful to realize that at the end of the term, the insured normally would have to reapply for another policy and undergo medical underwriting. This can be a problem if your health as changed so it is wise to look for term plans that have a renewable term. The renewable term will allow you to renew the term with a slightly higher premium, but without having to reapply.
Permanent Life Insurance policies remain in effect until the death of the policyholder as long as they have maintained their premiums. Most Permanent Life Insurance policies require that premiums are made for your entire life and part of the premium provides for an investment component. This investment component has savings built into the policy and you can tap or borrow against this “cash value”.
In contrast, Term Life Insurance provides coverage for a specific number of years with a much lower premium. At the end of the term, you typically would get no cash back. However, by then, your children would have grown up and your home either paid off or close to being paid off and the policy would have done it’s job.
Many people do believe that purchasing Term Life Insurance is also good because it keeps your insurance and investments separate. Although this is true, Permanent Life Insurance does have it’s advantages for the right person. It provides guarantees, safety, tax advantages, loan provisions, and accelerated cash value.
When you are in the market for Life Insurance, Balanced Care always encourages no obligation consultations so we can provide you with information and education to help you with this important decision for you and your family.
Terri Trepanier is the Owner of Balanced Care and a licensed insurance broker in New Hampshire and Maine. Located in Rochester, NH, she specializes in helping individuals and businesses with their Health Insurance, Dental Insurance, Life Insurance, Disability Insurance, Long Term Care Insurance, Medicare Supplemental, Medicare Prescription Drug Plans, Accident, Critical Illness, and Cancer Plans. Terri knows the importance of insurance products and how they help individuals and families. She continually strives to give her clients the Peace Of Mind that each of us deserves.
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