How to Choose What is Right for You

Most people know that getting life insurance is important. Employed individuals need to get life insurance to help their families replace their income in case they die. Spouses that work at home need to get life insurance to replace the child care and housekeeping services that they provide. Every individual will leave burial expenses behind that need to be paid for. Depending on how you handle your finances, life insurance will not necessarily be a permanent need. There is no one size fits all type of insurance. Whether whole or term life insurance is best for you depends on many different factors.

Investment Plans and Insurance

Your investment plans can affect the insurance plan that is best for you. If you diligently invest your money, your need for insurance may only be temporary. An individual with growing investments may eventually outgrow their need for insurance. If you need a million dollars of insurance when you are younger, and you eventually save that much money in a retirement account, you will be essentially self-insured. If you have been setting aside large amounts of money in a retirement fund and will probably have enough to be self-insured in the future, you may wish to purchase term insurance over whole life insurance. If you do not believe that you will have a large amount set aside for retirement, you may wish to purchase whole life insurance.

Insurance Needs Change

One of the reasons that individuals purchase insurance is to replace income or to pay for services like child care that a spouse provides. After you retire, you will not need life insurance to replace a lost income. In most cases, the surviving spouse will continue to receive the retirement income of their deceased spouse. You will also not need to pay for child care when your children get older. You may wish to purchase term life insurance to take care of these life insurance needs, as you will not need this amount of money for your whole life. Purchase insurance for a long enough term to last for the length of time that you will need the insurance for.

Funeral Costs and Final Expenses

No matter how old you are, your family will need to pay for final expenses and burial costs. If you are investing your money and putting together a savings program, you may have enough money in savings to pay for the funeral costs. If you are not putting money away in savings, you will probably want insurance to cover these costs. Since the need to pay for burial expenses will never go away, you may want to purchase a whole life policy to cover your burial and funeral costs.

Whole Life Hedges Your Health Bets

Although term insurance is often a good bet for expenses that will go away, you may still want to purchase whole life insurance instead. Whole life insurance will cover you even if you develop a chronic health condition later. If you choose term insurance and still need life insurance after your term is up, you may be denied because of a health condition, or the costs might go up. If you are unsure about whether you will need insurance at the end of the term or not, you may want to choose whole life insurance.