So maybe you‚Äôve thought about life insurance but aren‚Äôt sure where to begin, or the options seem too overwhelming. Patrick Blevins, State Farm agent in Lexington,Virginia, helps customers with their life insurance needs every day, and he‚Äôs here to help break it all down.
Short Term vs. Permanent Life insurance can be purchased as a temporary policy (term life (https://www.statefarm.com/simple-insights/planning/term-life-insurance)) or a permanent policy (whole life (https://www.statefarm.com/simpleinsights/planning/life-insurance-you-can-put-to-use-now), universal life (https://www.statefarm.com/simple-insights/planning/universal-life-insurance), etc.).
Blevins explains it as short term vs. long lasting.
‚ÄúThere are a lot of names, a lot of terms, a lot of companies with a lot of products, but when you break it down to make it easier to understand, there‚Äôs short term and permanent. With short term, it‚Äôs like renting a place. With permanent, it‚Äôs like owning a home, it‚Äôs yours,‚ÄĚ‚Äąhe said.
When to go short
Term life insurance policies are purchased for a specific period of time, commonly for 10, 20, or 30 years. If you‚Äôre still alive at the end of the term, your policy ends.
Term can be a good choice for families on a budget, or for protecting large expenses that have an end date, like a mortgage.
‚ÄúWhat‚Äôs good is that you can buy a lot of coverage for not a lot of premium. The downside is that these policies are designed to provide coverage for that specific term, after the initial term is over, the rates can significantly increase,‚ÄĚ‚ÄąBlevins said.
When to go long
Permanent policies typically include whole life and universal life, where your policies are designed to provide lifetime coverage.
Blevins talks about the benefits and realities of permanent life insurance.
‚ÄúIt‚Äôs initially more expensive than term for the same amount of coverage, but don‚Äôt confuse cost with value,‚ÄĚ‚Äąhe said. ‚ÄúPermanent insurance can provide a level premium for the life of the policy. In addition, permanent insurance also provides ‚Äėliving benefits‚Äô in the form of cash value. Over time, you can access values to help with life‚Äôs emergencies, help with education needs, or let it grow tax-deferred to help supplement a retirement. The choice is yours.
‚ÄúWhole and universal life policies have several variations. Depending on your needs, you can select a policy that works best for your budget, your family situation, and the time frame you wish to pay premiums. Regardless of which policy you choose, they are all designed to provide lifetime protection for those you care about most.‚ÄĚ
What‚Äôs right for you?
Blevins finds that once people understand life insurance, they see the value in it.
‚ÄúIt‚Äôs really about finding out what‚Äôs important to you (https://www.statefarm.com/simpleinsights/planning/term-or-whole-life-insurance-which-is-right-for-you) and having a conversation about where you‚Äôre at, what your gaps are, and making a decision that makes sense for you,‚ÄĚ‚Äąhe said.
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