If you have children, it’s instinctual to protect them at every cost. Part of that protection should include a comprehensive life insurance policy to protect your family in case something tragic happens to you.
If you’re insurance illiterate, you’ll want to take a look at the Top 3 family life insurance policies. This breakdown offers a no-nonsense definition of each kind of life insurance.
Whole life insurance
A whole life policy combines insurance with an investment fund. With this policy, a set amount of money is paid upon death, but as you pay your monthly premium you’ll also build cash value. You can borrow the cash you’ve built up in this policy, tax-free at anytime. For a family of five, this is a great policy to have. It can help cover college tuition or help your children buy their first home. Keep in mind, it does take time to build cash value, but it’s a great rainy-day fund. On the off-chance you or your family need money quickly, it’s there for you to use.
Term life insurance
Term life insurance is often the most affordable kind of life insurance. This fixed-term policy, which pays out a flat rate upon death, is usually available for one to thirty years. It’s a great starter option for a young couple with plans to begin a family. The younger and healthier you are, the cheaper your monthly rates are.
Universal life insurance
Universal life insurance is a kind of whole life policy. Much like whole life, it pays a death benefit and offers a way to build cash value. The difference is flexibility. With a universal life insurance policy you can change the terms of your policy while it’s in effect. There are limitations, of course, but this policy is designed for adjustments.
Most families opt for a combination of whole life and term policies. By combing the two, you’ll be able to get the best of both worlds. The premium for a term life insurance policy will keep your monthly budget on track, while a whole life policy offers some investment potential. To start, many couples get enough insurance to cover the cost of their mortgage. Your coverage can be split between the two policies. For example, if you owe $250,000 on your home, you and your spouse could get a $200,000 term life policy and a $50,000 whole life policy. Keep in mind, you can always add coverage as you age, or your family grows.
Life insurance is the best way to secure your families future after you’re gone. Life insurance policies not only provide a monetary gift for those left behind, but these policies also cover medical expenses and burial costs. For many families, burial costs are an unexpected burden that adds up quickly. The cost of a funeral can hit $20,000, depending on the services selected. To make sure your family doesn’t have to deal with this final bill, life insurance is the best answer.
If you need help deciding which policy, or combination of policies, is right for your family, be sure to ask a life insurance agent for more information.
Lori Robinson is the leading contributor to Monkey Insurance, a car and life insurance comparison site. For every life insurance quote taken out,Monkey will donate a portion to your charity of choice.
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