Choosing Life Insurance: Top Tips

May 7, 2013

Life InsuranceLife insurance is a difficult topic, and not only because no one wants to think about the worst case. It can be hard to understand the options and determine which is the best choice. With a few easy tips, anyone can select the right coverage to make sure loved ones are taken care of for the future.

How Much Coverage Is Needed – and Why

Online life insurance calculators make it easy to work out the right amount of coverage to purchase. Some of the factors that go into this number are whether the insured is the main breadwinner for the family, how many dependents would be left behind, the income they are used to having, and the amount of debt the insured carries.

Often the amount of life insurance that is needed can be a bit startling to many people, and the premiums to get this coverage can seem high. Fortunately there are ways to lower the costs, usually by making good use of the different types of coverage available.

While some people may want to skip out on this coverage due to the cost, the lack of such a policy could be disastrous for those left behind. “If you think you can’t afford life insurance, your family probably can’t afford for you to not have it,” reminds Tammy Ezer of

Term Life Insurance Coverage

A term life insurance policy is one that is in place for a pre-determined length of time. This type of policy is more affordable, because the odds that the company will have to pay out are lower. The shorter the term, the more affordable the coverage will be.

Term life insurance is perfect for those needing a large amount of coverage for a specific amount of time such as:

  • New homeowners looking for mortgage protection
  • Parents wanting to provide for children until adulthood
  • People with large debts such as student loans

A term life insurance policy does come to an end, and at that time it may cost more to extend the coverage, but it’s a good choice for those on a budget.

Permanent Life Insurance

Also known as a whole or universal policy, term life insurance is designed to last through the end of the policy owner’s life. Because the odds that the benefit amount will have to be paid are much higher – almost guaranteed – these policies cost more. The benefit to a permanent policy is that the premium is locked in for the duration.

Young, healthy people who are looking to get long-term coverage should consider paying a little more for a permanent life insurance plan. It is coverage that can’t be taken away no matter what health concerns might crop up in the future.

Combining Policies

One of the best ways to get the benefits of both main types of insurance is to take out a small permanent policy as well as a larger term policy. This keeps the premiums affordable, provides long-term coverage, and gives the largest possible death benefit during the time it’s needed most.

Once the term policy expires, the permanent policy remains in place to cover important things like final costs and support of a spouse left behind. It gives the insured the best of both options.