Life insurance is a product that offers a lump sum payment to your chosen beneficiaries in the unfortunate situation that you die. At its most basic level, Life Insurance comes in 2 forms – Temporary or Permanent. Think of term insurance as TEMPORARY and permanent insurance, as it name states, as PERMANENT. Term insurance comes in multiple forms – T10 (10 years), T20 (20 years), T30 (30 years). Policies typically will have some extension options included, such as automatic renewal (your policy will provide the pricing for automatic renewal), switch (change from a T10 to T20/30 before a deadline), Conversion (convert some or all of your coverage to permanent insurance). But a key element is that the insurance has an end date. The insurance companies will not provide renewals beyond a certain age (between 75-85). As for permanent insurance, it provides you with insurance coverage for your entire life. Why one vs the other? Term insurance can be used to cover short term needs: mortgage, other debt, higher need for funds when children live at home. Permanent insurance can serve to create an estate for your family, as a form of tax deferral, or to cover needs for a lifetime. Each can serve a purpose at different points of time in one’s life.
My role is to help you evaluate which is best to use depending upon your financial situation. Through a short conversation and working through a straight forward framework, I will be able to identify the right amount and the best options for your situation, allowing you to make an informed and excellent decision.
