Countless Life Insurance Products… But Which Is Best For You?

There is an abundance of different types of life insurance products on the market. While this offers many specialized products and plenty of options, it can also be a burden when shopping for life insurance. Shoppers are expected to decipher between products such as term life insurance, participating life insurance, indexed life insurance, graded benefit life insurance, and many others. To add to the confusion, not only are they expected to understand them and choose the right product for their family, but they are also expected to make the most cost-efficient decision.

Buy for your current stage

Shopping for life insurance is understandably an overwhelming task, after all we’re planning for the future and a lot of “what if’s” can happen between then and now. The best thing to do is, plan for the present. Even though life insurance is built around the premise of planning for the future, the best place to start is to shop for your current needs. It is assumed that as you pass through the different life stages, your needs will change.

Life stages typically last between 5–10 years and can be categorized as: single, raising a family, seeing the kids through college, empty nesting, and seniors. 

Life insurance purchasing practices

You can obtain the best life insurance possible by determining how much income your survivors would need if you were no longer here. You would then consider the types of life insurance products you can afford given the death benefit amount your family would require.

By buying short-term life insurance policies and reassessing your coverage needs regularly, you will ensure that you have the most affordable rates for your current life stage.

Long-term life insurance

While there are many different life insurance products on the market, the most affordable option will be a short-term life insurance and is a good place to start your shopping. However, if you can afford something more expensive, you can invest in a longer-term policy or a permanent life insurance policy.

A short-term policy does come with a slight risk factor. Because it lasts for a short period, you will have to purchase a new policy when it terminates. This is both a pro and a con because by regularly shopping and comparing rates, you will have the best rate possible. Then again, this is only true as long as your health stays the same. If you develop health complications, this will dramatically increase the premium rates of your next policy or you may no longer qualify for the insurance product.

This can be avoided by purchasing products with longer-term periods, or no term periods at all. This way, as long as your premiums are paid, no new health conditions will affect your current policy rate. Another option is to invest in a permanent life insurance policy, these have no termination dates and they develop equity that can be used towards any special financial needs you may have, such as retirement.

Permanent life insurance Options

Traditional whole life insurance: this is the most basic permanent life insurance option. You pay fixed premiums and in return you will receive a fixed death benefit and a guaranteed equity growth rate.  It is easy, never expires, but it is pricey.

Universal life insurance:  this product is the more affordable permanent life insurance option. Unlike whole life insurance, which has a fixed growth rate, universal’s growth rate is not fixed and subject to fluctuate. What usually scares consumers away is that its owner must heavily monitor it. In order to keep the policy from lapsing, the policy's cash value must be maintained.  It requires a lot more attention and effort than whole life or term does.