The two most popular types of life insurance are either Term Life Insurance or Universal Life Insurance.
Term Life Insurance will last either 10, 15, 20, 25 or 30 years. Once the term is over, the insurance carrier will typically give you an option to renew the coverage, but at a significantly higher price. Term insurance is very inexpensive and can suit your needs quite well if your need is more temporary in nature. These needs can include providing protection to your family to pay off your mortgage, living expenses, income replacement and college tuition for the kids.
It’s no coincidence that most life insurance companies offer term life coverage only up until 30 years. Most all mortgages are paid off after 30 years, your kids will already be finished with their education and your spouse or dependents will typically be self-sufficient by the time the term of the policy up. At this point, a Universal Life policy would suffice for the duration.
A Universal Life Policy differs from Term Life in that the coverage can last for your entire life. This policy will typically cost more than a term life insurance policy, but will build a cash value along the way. The extra premium you pay will go into a cash account that will earn interest at market rates and build a cash value that can be borrowed against or sold at a later time. The policy can be set up so that you pay premiums until your death (this is the least expensive way and the cash value will build at a slower pace) -or- you can stop paying premiums at a certain age and the policy will be “paid up” and remain in force for your entire life (cash value builds more quickly, but the premiums are more expensive).
A person’s life insurance needs will typically decline in their later years once they’ve retired, the kids have left their home or if their home mortgage or any debts are paid off. What we normally recommend for your typical family is that you have a larger face amount term life insurance policy that will cover you until either the home mortgage is paid off of the kids have graduated from college (or any other significant debts you may have). Simultaneously, you would purchase a smaller face amount Universal Life insurance policy that will last for your entire life. The Universal Life policy would generally just be used for a few years of income replacement and debt reduction in the event of your death.
Selected Benefits can provide this type of comprehensive life insurance protection for Texas residents, so visit us at www.selectedbenefits.com or call 866.270.6209 for more information.