What type of insurance is best?

What type of insurance is best?

• Insurance
• September 15, 2021

What type of insurance is best?  

When buying insurance, you’ll be offered a choice between term and permanent insurance. It’s important to understand the difference in order to choose the option for you and your future.

Term insurance  

Term life insurance is an insurance product that covers you for a set amount of time. If you pass away during that term, the policy will pay your beneficiary, also called a death benefit. During the length of your term policy, your payment rate will remain the same. When the term expires, you will need to purchase another term policy, as your rate will go up and coverage may change.

It might appear to make sense to lock in for as long as possible, but remember, your needs change as you age. Term insurance works well if you’re raising small children or for the length of your mortgage, as the monthly policy cost is usually a lower cost, compared to permanent insurance. Once these shorter-term additions to your insurance needs are no longer an issue, permanent insurance might be the better choice.

Permanent life insurance  

With a permanent life insurance policy, your policy remains in effect, as long as you continue to pay your premiums. These policies tend to be more expensive but have many benefits, including tax-deferred payments. This can mean nice savings for you (think long-term, towards retirement) and a nice payout to your beneficiary no matter when you pass away. Secondly, some provide cash value option — funds you can borrow if needed, while you’re alive.

When it comes to term and permanent life insurance, there is a lot to know. It’s best to speak to a specialist who can help drill down to the specific nuances of each option to determine what makes the most sense for your circumstances.

What types of insurance do I need?  

Insurance  about protection. It’s long-term financial security so that, when you need it most, there’s money to help you, so that a tragedy doesn’t turn into an economic disaster for you or your loved ones.

What you need now will likely not be what you need in the future. What makes sense for one person, even if their circumstances seem similar, might not be the best option for you. It is crucial to understand your own short- and long-term needs and goals and expectations for your insurance product before deciding what policy to invest in.