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What Kind of Life Insurance to Buy
Now that we know when to buy, what type of policy should we purchase. Using the previous example, the family above is burdened with debt in their early years. As time goes by, this debt is paid off as salaries increase and saving is accumulated. Once their debt is paid off with a sizable savings, there is no further need for life insurance. This time frame is usually over a 20 to 30 year period. As a result, this family may have bought a “Term Life Insurance Policy” in the early years of the family. A Term Life Insurance Policy is issued for a period of time called a “Term” and cost less than a permanent policy. A Term Life Insurance Policy is usually issued as annual renewable term, five, ten, fifteen, twenty, twenty-five or thirty year term. After the term is over, one has the option to purchase this policy at a much higher price as permanent insurance or just let it expire. Assuming their debts are paid off, at the end of the term, this family can rely on their savings and investments for burial expenses. On the other hand, this family may want a permanent life insurance policy that will outlast the owner and be able to accumulate value while paying premiums. Unlike Term Life Insurance, Whole Life or Universal Life Insurance is permanent. These policies are typically more expensive but give a guaranteed rate of return and expire well beyond the average life expectancy of the owner. In many cases, these policies last until 125 years of age. This family will not have to worry about the expiration of their policy and will likely have an accumulated savings after owning the policy over a long period of time.
The Health Insurance Blogger