Life insurance is a contract between an insured (person who is covered or owns the policy) and an insurance company who provides the coverage. Under that contract, the insured/policy owner promises to pay the premiums on time and the insurance company promises to pay your beneficiary upon your death.

There are two types of life insurance; Term life and whole life. 

Term life. Term life is for a specific period of time (ie. 10, 15, 20, or 30yrs). You pay premiums for the duration of the term or period of time. Generally, consumers request term policies to cover financial obligations that they expect to decline over a specific period of time, such as a mortgage. The premium payments generally don’t change during the requested term or period. What happens to term life insurance if you don’t die? Many times it depends on when and through who you took out your policy. Older term life policies simply lapse at the designated term you select at which time you have no further premiums due, and there is nothing the insurance company will pay out. However, if you decide to take out another policy, you will have to pay the rates for a person of that age (attained age) which will be considerably higher, because all life insurance products cost more when you are older. Modern term life policies sometimes offer a return of a portion of your premiums if you don’t die while coverage is in force, which provides more value for some. 

Permanent or Whole life. Whole life insurance remains in force until you die. Because this coverage is permanent, your premiums won’t change. Whole life insurance also has an added benefit of accumulating cash value which you can borrow against later if you want or need to. Due to whole life policies having cash value after a period of time and being a permanent type of coverage, the premiums are understandably higher.

The best type of life insurance is the kind that fits your personal circumstances best. Life insurance is not a one-size-fits-all product. Your situation is unique and should be treated accordingly. Since life insurance is a financial product and involves risk for both you and the insurance company, it is highly regulated. Any agent offering to assist you in determining the best type of life insurance MUST be licensed and appointed by the agent’s State and insurance company. There is nothing wrong with verifying your agent’s credentials, and are encouaged to do so by visiting your State’s department of insurance online. In my state of residence, Texas, for example, you can do an online search and easily verify whether the person contacting you after you submit a quote is licensed and appointed by the State. Here is a direct link to the search tool: https://www.sircon.com/ComplianceExpress/Inquiry/consumerInquiry.do?nonSscrb=Y

While finding affordable life insurance coverage is an important part in your planning, price alone should not be the only consideration. Price is directly affected or influenced by the amount of competition in the marketplace, and the insurance business is VERY competitive. The best and cheapest life insurance are not necessarily the same thing. The old adage “you get what you pay for” is certainly at play here. If you find a policy that costs considerably less or considerably more than most others, it might be an indicator that something may be amiss. Speak with your agent as he/she will have access to tools to help you compare and find the best options for you. Then, simply choose the one you feel suits you best.

While finding affordable life insurance coverage is an important part in your planning, price alone should not be the only consideration. Price is directly affected or influenced by the amount of competition in the marketplace, and the insurance business is VERY competitive. The best and cheapest life insurance are not necessarily the same thing. The old adage “you get what you pay for” is certainly at play here. If you find a policy that costs considerably less or considerably more than most others, it might be an indicator that something may be amiss. Speak with your agent as he/she will have access to tools to help you compare and find the best options for you. Then, simply choose the one you feel suits you best.