The best life insurance policy for each individual and family varies depending on several factors and considerations. Two main types of life insurance policies are available: term life and whole life. Selecting between the two types of insurance for the family requires financial and family assessment.
Find out if an employer offers a life insurance policy. A term life policy offered by an employer is a group policy and has relatively low rates depending on your income. In general, these policies are terminated upon leaving the company. If the company offers life insurance, read over the policy amount before signing up because some policies might not er enough for the family.
Evaluating the financial situation of the family is another consideration. Term life insurance usually has less expensive premiums while whole life insurance has higher initial costs. In general, most families will want a policy to cover around five years of the insured’s income or more to supplement costs in case a death occurs. If the premium for five years salary is too high in a whole life policy, a term life policy is appropriate for the family.
Considering the age of the insured individual will help determine the appropriate life insurance policy. Term life insurance is usually least expensive for younger individuals and gradually gets more expensive. In general, someone under 40 years old should invest in a term life policy for a specific time period. In most cases, someone older than 40 years old should invest in a whole life policy.
Look at health before selecting a policy. Many term life policies will increase premiums or will not accept individuals who are in poor health. Whole life policies will often cover individuals even if they have a health problem.
Considering the reason to obtain life insurance makes selecting the appropriate policy easier. If a family has financial obligations like college tuition or raising young children, a term life policy for the duration of the time needed to fulfill the obligations is often appropriate. If the reason for the policy relates to leaving behind money for a charity, children or some other organization, a whole life policy is the appropriate insurance.
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