Finding the Right Life Insurance Policy

When a loved one dies, it's often hard to see past the pain and grief and make plans for the future. But life goes on, and it's vital to provide for emotional and financial needs ahead of time so those left behind can not only survive, but thrive.

That's the job and policy of life insurance. The right plan can mean the difference between prosperity and poverty when death claims a loved one. By giving family members time to readjust—and the resources needed to do so—this product fills a gap that nothing else can.

Answering Some Difficult Questions

Insurance can be a complicated subject. But by answering a few questions about personal and family life, a difficult subject can become simpler.

Ask yourself:

• Who is dependent on my income?
• How much income do I currently provide?
• Do I want to set aside money to pay for my children's education
• How will my family pay final expenses in the event of my death?
• Do I want to donate money to charity when I die?
• Do I want to leave money for family members?

Equipped with the above information, relay it to an insurance agent, who can help locate the best coverage to fit everyone's needs.

Examining Policies One by One

Depending on financial and lifelong goals, a life insurance agent will recommend coverage that best meets family needs. 

Whether the goal is to leave money so loved ones can pay final expenses or simply to provide savings for the future, a policy from amongst the following types should be just what the doctor ordered:

1. Whole life: a policy that covers the insured for life, not just a set period of time. Premiums remain level while the policy is in effect, and the insurer invests a portion of the premiums paid, building the policy's value over time.
    
2. Term life: the simplest form. Coverage is purchased for a specific policy period and, if the insured dies during that time, the beneficiary receives the full value of the policy. Term insurance does not allow for investment.
    
3. Universal life: used to accumulate investment. Minimum premiums are paid and an additional amount invested, usually in bonds and mortgages. Both the investment and its returns are placed into a cash-value account, which may then be used to pay future policy premiums—or left untouched to continue building.
    
4. Variable life: similar to universal life insurance, but includes a broader selection of investment products, including stocks. Beneficiaries receive the face value of the policy, OR that amount PLUS the value of the investment account.

With the help of a pro, choosing the right coverage for you can be simple. Since loved ones may not be thinking clearly during a time of loss, an agent can help you make the right choice now.

Related:

What to Do When a Life Insurance Policy Goes MIA