So maybe youâve thought about life insurance but arenât 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 heâs 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.
âThere 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, thereâs short term and permanent. With short term, itâs like renting a place. With permanent, itâs like owning a home, itâs yours,ââhe 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 youâre 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.
âWhatâs 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,ââBlevins 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.
âItâs initially more expensive than term for the same amount of coverage, but donât confuse cost with value,ââhe said. âPermanent insurance can provide a level premium for the life of the policy. In addition, permanent insurance also provides âliving benefitsâ in the form of cash value. Over time, you can access values to help with lifeâs emergencies, help with education needs, or let it grow tax-deferred to help supplement a retirement. The choice is yours.
âWhole 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.â
Whatâs right for you?
Blevins finds that once people understand life insurance, they see the value in it.
âItâs really about finding out whatâs 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 youâre at, what your gaps are, and making a decision that makes sense for you,ââhe said.
State Farm (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates) is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites hyperlinked from this page. State Farm has no discretion to alter, update, or control the content on the hyperlinked, third party site. Access to third party sites is at the userâs own risk, is being provided for informational purposes only and is not a solicitation to buy or sell any of the products which may be referenced on such third party sites.