Term Life versus Whole Life

After you determine how much coverage to purchase, next consider what type of plan you should purchase. Essentially, two types of life insurance plans exist: term life and whole life. Depending on your situation in life, one or both of these types of plans might be beneficial to your beneficiaries. Weigh each type carefully because doing so can greatly affect premiums and the eventual cash payout upon your death.

Term life insurance plans are typically purchased by individuals going through big changes in life – such as young parents wanting to have insurance during the years they are raising children, entrepreneurs who are just starting a business or newlyweds who might have significant debt. These policies typically are issued in five year increments with some having the possibility to convert to a whole life policy.

Alternately, whole life insurance plans are typically purchased by individuals who want full coverage for their entire lives because term life policies run out after so many years. After a term life policy expires, no death benefit is paid out if you are still alive. No cash accumulation is available with a term life policy either, whereas it is with a whole life policy. Furthermore, some whole life plans might even offer dividends that essentially increase the plan’s overall value. Allowing for withdrawals, whole life plans can supplement retirement income or be available during times in your life when you might need extra money.

Whether your death eventually becomes expected or unexpected, planning for it now will save your loved ones a lot of added stress when that day eventually comes. Although you can’t do anything after you have passed away, there is one thing that you can do today that will show your family and friends that you care: purchasing life insurance.

As you research life insurance plans, try not to become overwhelmed with terminology, plan options, carrier names, ratings and everything else in between. Take your time and read everything carefully while working with an experienced life insurance agent who can guide your decisions and answer any questions you have along the way. The way that you choose a life insurance plan might follow this general path of actions:

• Assessing your needs and determining the amount of coverage
• Deciding what type of plan you need
• Choosing a life insurance carrier
• Getting the best premiums

Assessing Your Life Insurance Needs and Determining the Amount of Coverage

Assessing your need for life insurance is much like trying to determine how many groceries to buy each week: Just how much is needed to survive? In the case of life insurance, assessing the need is determined by taking your beneficiaries into consideration. How much coverage do they need in order to recover from the loss of your income, to pay for your final expenses or to cover the cost of monthly expenses?

To determine how much life insurance to purchase, you must consider your expenses, debt and annual income. Sufficient life insurance coverage is determined by adding together the following:

• The amount of your annual income multiplied by about ten
• About $100,000 for each person in your household such as a spouse or children
• The dollar amount of outstanding debt you have such as collage loans, credit card expenses or a mortgage

For More Information

Life insurance is an essential part of financial planning.   Call a NISONA advisor today at 888-564-7662 to discuss details of affordable life insurance plans will safeguard the lives of your loved ones for years to come.