Choosing the right type of life insurance

The question of what type of life insurance to buy is a formidable one for many shoppers who have little practice evaluating their assets and financial needs.  Moreover, if one is not already familiar with the different life insurance products on the market, it may appear an insurmountable question.  Before exploring your options, here are three facts to put your mind at ease:

1. For most people, term life insurance is the product of choice. It satisfies most needs and is the simplest, cheapest variety of life insurance. What is term life?
2. You are not limited to buying only a single type of life insurance. You could buy a different policy for each of your coverage needs if you wanted.  Moreover, you can drop existing coverage at any time.
3. The best product is one that you find comfortable and manageable.  Some policies make no demands on their owners; others require close attention but afford the owner much control.

Using agents and protecting yourself

When choosing a type of life insurance, keep in mind that your life insurance advisor has a great deal more experience than his/her clients do.  He /she should be able to describe how each available product behaves.

It's true that not every agent is reliable.  Therefore, you should become passably familiar with the three main types of life insurance and also read and understand your policy before you purchase it.  If you have a bad experience with one agent, do move on to another agency, but don't forget to hold your former agent accountable for any fiduciary misconduct.  Courts tend to rule in favor of the plaintiff when an agent has given bad counsel, intentionally or not.

Your options

Life insurance products are either term policies or permanent policies.  Term policies are designed to provide coverage for a certain duration, usually 5–25 years.  Permanent policies are designed to provide coverage for the remainder of an insured's life.  Permanent policies are either whole or universal life insurance.  Whole and universal policies differ in that, where the former offers security and rigidity, the latter provides flexibility and a charge of responsibility.

Term, whole, and universal life insurance are the three main types of life insurance, of which all others are subtypes.

Certain products are more effective for special purposes, like business, mortgage, or estate protection.  Some policies are designed especially for individuals of impaired insurability.  Visit the Types of Life Insurance page to pursue your research in more detail.