Choosing coverage

When choosing coverage, you will no doubt be asked if you prefer term insurance or permanent insurance. Term insurance is the least expensive life insurance, and such policies only last for a predetermined number of years. Men and women may purchase life insurance policies if they only want life insurance until they retire or until their children reach adulthood. Permanent insurance is more expensive and will last from the moment you purchase the policy until your death. Many people choose permanent life insurance policies so the money their beneficiaries receive upon their death can be used to pay estate taxes. In addition, there is an investment component to permanent insurance policies, as a portion of the premiums on such policies is invested (policies will spell out how the money is invested) and allowed to grow tax-free so long as the policy is open. Term insurance only provides protection with no investments.

When choosing how much coverage to purchase, it’s easy to go overboard and aim for as much as possible. However, many financial advisors suggest purchasing enough coverage to pay for funeral costs and a level of income replacement you can comfortably afford. If your spouse does not work, you should consider purchasing enough coverage so he or she can afford to pay the family’s day-to-day cost of living expenses.

Life insurance merits serious consideration, and adults should do their homework and fully understand a policy before signing any contracts. — Courtesy of Metro Creative Graphics