If someone depends on you financially, life insurance is a topic you can’t avoid. We have the answers to common questions about life insurance so that you can make informed decisions about protecting your loved ones financially.
Types of Life Insurance
Types of life insurance generally fall into two categories: term life insurance and permanent life insurance.
Term life insurance provides protection for a specific period, often 10, 20 or 30 years. Term life insurance makes sense when you need protection for a specific amount of time--for instance, until your kids graduate from college, or your mortgage is paid off. Term life insurance typically offers the most amount of coverage for the lowest initial premium. This makes this type of life insurance policy a good choice for those on a tighter budget.
Permanent life insurance provides lifelong protection for as long as you pay the premiums. It also accumulates cash value on a tax-deferred basis, which you can tap into to buy a home, supplement your retirement income, cover an emergency expense and more. Because of these additional benefits, initial premiums are higher than what you’d pay for a term life insurance policy with the same amount of coverage.
Life Insurance Coverage
Life insurance covers any type of living expense. Some common examples include:
- Funeral and burial costs
- Medical expenses
- College costs
- Credit card debt
Life Insurance Cost
The price of your life insurance policy will generally depend on four things: your age, your health, the type of policy, and how much coverage you buy.