Life Insurance Tips: Part 2 – Policy Type

One of the main motivating factors behind purchasing a life insurance policy is the idea of what the life insurance plan can do for you.  For some, life insurance can be used to temporarily transfer a person’s financial risk to a financially solvent insurance company.  If temporary coverage is what you seek, then you may be looking to cover a specific period, such as your mortgage or certain periods of your children’s developmental years.  If you have a true temporary coverage need, then a life event such as the purchase of a new home, a new baby, or getting married, will be your motivating factor in seeking out coverage.  You may choose to match your short term need with a Term policy – where the coverage period blankets the duration in which you are financially vulnerable. 

In addition to the previous policy type, there is another category called, “Permanent Insurance”.  Just as Term Insurance can be compared to “renting”, Permanent Insurance can be compared to “buying a home”.  Some consumers purchase their life insurance policies with the intent of using some or all of the built up cash values in their policy at a later time in the future, while many parents start these policies for their young children, then sign the coverage over to them when they become an adult.  If you are looking for one of these types of policies, you should really start as soon as you can afford it – because the younger and healthier you are, the lower your rate will be.

To help my clients better understand the importance of purchasing a policy at a younger age, I often use this analogy: “If you could have locked in gas prices back when they were 99 cents a gallon, would you do it?”  Then I ask, “so why would you hold off on purchasing your permanent insurance policy when you know the rates are climbing each year with your age?”

In conclusion, there are many different driving factors which motivate consumers to start looking for life insurance coverage.  When it comes to timing, I recommend completing your life insurance planning as soon as you can.  In doing so, it will be cheaper, easier to qualify for, and most likely you will qualify for the more “feature rich” policies.

If you need help determining your coverage needs, please contact me to set up an appointment and I will be happy to help you out.