Choosing the Best Type of Life Insurance

Choosing the Best Type of Life Insurance You have decided it's time to buy some insurance, so where do you begin? Most people are vaguely familiar with term insurance, whole life insurance and variable life but they have a difficult time deciding which is right for their situation. If you don't have an insurance agent that you can completely trust, it's hard to know where to turn.

The first question I would ask is "Why are you purchasing this insurance?". If you are buying it to simply protect against an untimely or premature death for a specific period of time (10-20 years) then term insurance is probably your best choice. You will want to keep the term as short as possible to keep your rates low, so if you only need 10 years of coverage, simply buy a 10 year level term. A 20 year level term premium will normally be 60-70% higher than a 10 year term since you are doubling the length of time the insurer will be exposed to a loss. An example of a short term insurance need would be if you had a $100,000 business debt that will be paid down over the next 10 years.

Term insurance should always be considered temporary protection, the odds are it will not be in force when you die and that's why it's inexpensive. As you age, term insurance becomes prohibitively expensive. So you should not use it for estate planning or other purposes where you intend to die with the coverage intact.

Whole Life, Universal Life & Variable Life are considered Permanent Insurance products that are used for several purposes such as estate planning or as part of a comprehensive financial plan. There has been a long debate concerning Term Vs Whole Life Insurance but that is misguided because the two products have different purposes. The reasons to carry permanent insurance of any kind are to provide tax free money at the time of death, regardless of age. If your family needs money at the time of death to pay estate taxes, burial expenses or a business buy out then the only way to make sure that occurs is by using a permanent insurance plan.

Never make insurance decisions based on cost alone. Term insurance is always cheaper regardless of when you initiate the coverage but if you live a long life, you will most likely die without the coverage. The reason behind buying the policy determines which is the best option.

Michael Peterson is the owner of Online Marketing Center and has been helping educate consumers on financial issues online since 1996. Additional information on this topic can be found at: http://www.insurancefargo.com Article Source: http://EzineArticles.com/?expert=Michael_R_Peterson