The first step is to determine whether you need life insurance. If someone will suffer financially due to your death, then you need life insurance. Life insurance will provide the cash needed to your family for continued expenses.
We will focus on the Term today!
Term insurance is a basic, easy to understand and inexpensive way to provide life insurance for a certain time period.
There are three types:
1. Annual Renewable Term
This type renews annually. Usually very inexpensive to start but the premium increases as you age. Can become unaffordable.
2. Level Term
This type is for a certain period of time; 10-20-30 years, the premium remains level during the period of time that you chose.
3. Return of Premium Term
This is a new type of level term introduced in the past few years. This is for those who want coverage for a specific time period and cash back afterward. This cash that is returned can be used for college, retirement, house pay-off, etc. The basic premise is that you pay a level premium for a certain period of time, say 30 years. At the end of those 30 years you get a refund of the premiums you paid in. The cost of this policy is more than the typical level term policy, but in the end you are getting it back.
If you would like to discuss the different options, feel free to give me a call.
Watch for our next discussion on Permanent policies.