Planning for the future is an exciting yet nerve-wracking task. For one, you honestly do not know what is going to happen in the future. What you have planned out may not actually happen. However, on the other hand, thinking about the future is exciting as there are so many possibilities.
When you plan for your future, you look at all the different stages of your life – a young adult learning about life, getting married and starting a family, your career path and any side jobs, up until your retirement. Each stage deserves some thought because they will all affect each other.
There is one aspect of your life plan that you shouldn’t overlook, and that’s life insurance. Even if you are just at the start of your plans, you should still include life insurance. By getting a policy, you are securing the future of anyone who depends on you. If you were to pass away unexpectantly, that policy would help cover any expenses and the loss of income.
What type of life insurance should you plan for though? That all depends on your financial situation, how much coverage you want, and if you plan to use it as an investment. Here are the most common types of life insurance.
Note: While life insurance protects your family financially if you were to suddenly pass away, it’s also important to make sure you have the proper health coverage. Accident plans are a great way to make sure you’re not stuck with a large medical bill.
Term Life Insurance
The simplest type of life insurance is term coverage. As the name would suggest, you purchase a policy for a set amount of time (typically for 10, 20, or 30 years). If you were to pass away during that time suddenly, the policy would kick in for your beneficiary. After the agreed period is up, you have the choice to renew your policy or let it expire.
Term life insurance is great for those who are unsure how much they will need, or if you plan to not have any more insurance later in life. It is more flexible, easy to understand, and relatively straightforward.
Whole/Permanent Life Insurance
The other type is whole, or permanent insurance. This type of coverage goes for your entire life, even if you live to be 100 years old. Once you lock in your policy, that is what you have for the remainder of your life. The upside to that, if you purchase your policy at a young age when your premiums are likely to be at their lowest, they will never change. The downside, however, even if you get coverage young, the premiums are likely to be still more expensive than term insurance.
Permanent life insurance has a portion called cash value. It is similar to a savings account for your insurance. Part of your monthly premiums goes towards the cash value. You can draw upon this cash value at any time, although it is treated as a loan. The insurance company will charge interest as you pay the amount back. If you suddenly passed away while you had money out from your cash value, the difference would come out of the death benefit.
When it’s time to decide which type of life insurance to get, there are many questions you’ll want to ask yourself. Speak with a trusted insurance company to ensure that you get the right amount of coverage that is best for what you need.
