What type of insurance is right for me?
There are many factors to consider when determining how much insurance you need. You need to look at variables such as how many children you have, whether they plan to go to college or have special needs. You also need to know how many years are left on your mortgage and how much debt you have. An experienced financial professional can use the answers to these questions and others to help determine how much life insurance you need.
Your next step is to decide which type of coverage best fits your needs: term insurance, which offers a death benefit for a specific period of time, or permanent insurance, which can provide lifetime protection plus the potential to build cash value tax-deferred.
There are no hard and fast rules as to which type of coverage to choose. However, when you're starting out in your career or your children are young, you might find term insurance to be a cost-effective way to cover a short-term need (generally 20 years or less). On the other hand, if you choose a permanent insurance policy, such as whole life or universal life, you can potentially build cash value that you can access during your life on a tax-advantaged basis. Since permanent insurance has a cash value component, the premiums may initially be more costly than those for term insurance.
Which choice is right for you? It depends on a variety of factors, including your cash flow, your investment portfolio and how many years you plan to keep your coverage. Also, you'll need to review your insurance coverage regularly to make sure it still meets your needs and addresses any changes in your situation. A financial adviser can help you make the right selections.
No comments:
Post a Comment