There are many ways that you can look to protect your family. After a long, confusing year worrying about our health, many may be thinking more about life insurance. But is this the best move for you, both in financial and planning terms? When deciding on the correct life insurance strategy for you and your loved ones, considering all sides of the issue can help you narrow down your requirements. Term life insurance and whole life insurance are the two most common types of life insurance. Listed below are the life insurance pros and cons from the experts.
(source LifeInsurance.org)
Term Life Insurance Pros and Cons
Term life insurance provides policyholders with a “benefit only” type plan. Generally, term policies stay in effect from five to 30 years, depending on the terms of the policy that you choose.
Pros:
- Term life plans are affordable.
- Term life plans are relatively straightforward and easy to understand – with no surprises.
- Term life plans are often renewable at the end of the term. Be sure to check with your insurance provider for this benefit.
- If you live longer than the policy term, some providers will return a portion of your paid premiums. They may also offer to transfer your policy to a whole life plan.
Cons:
- Term life plans do not have a cash value.
- A physical and health questionnaire are typically required for eligibility in a term life plan.
- Coverage and benefits are limited to your term’s duration.
- If you outlive your policy and opt for an additional term life plan, your premiums may significantly increase.
Whole Life Insurance Pros and Cons
Whole life insurance is permanent life insurance that provides coverage for the insured for their entire lifespan. They offer a death benefit and accrue cash value.
Pros:
- Whole life plan coverage extends for your entire life and won’t change as long as premiums are up to date.
- Premiums usually remain consistent over the life of the policy.
- This type of life insurance policy accrues cash value that can be borrowed against before death.
- Whole life policies can be included in estate planning.
Cons:
- Whole life insurance is typically a more expensive insurance option.
- This type of life insurance policy can be complex and more difficult to understand.
- Whole life provides an investment instrument which may be unnecessary for many individuals.
Assessing Your Life Insurance Needs
Life insurance is an effective and easy way to help family members or those left behind after your passing with their financial needs. For most people, a policy worth at least 7 times your annual salary is a starting pint. This will provide assurance that those left behind can continue to pay bills, keep up with the mortgage, and cover expenses for years to come.
If you have a spouse, children or other dependents in your care, life insurance is a good idea. Others who look into life insurance include business owners and entrepreneurs, those who wish to cover their own final expenses and funeral costs, and those with outstanding debts which they do not want to pass along to their family members.
If you have any questions, call the life insurance pros at Anderson & Associates Insurance Group. We are here to help Palmetto, Parrish, Bradenton and Sarasota families to protect their financial legacies with a life insurance policy that fits their needs.
