Which Guarantee Best Fits Your Family?

When you think of your financial situation, do you think about only you or do you think about your loved ones?  Do you think about only the here and now or do you think about the future?  There is a famous saying, “There are no guarantees in life.”  Although that may be true in most cases, in this case, you can have a guarantee, even if it is for a specific time frame.  There is another saying, “Something is better than nothing.”  Having life insurance for you and your family can give you a guarantee to help avoid financial devastation if the unexpected should occur.
 
For some, the thought of life insurance becomes overwhelming.  Just the decision to purchase term insurance or permanent insurance can cause anxiety.  The best way to view the decision of term insurance versus permanent insurance is to compare it to renting or owning a home.
 
Renting a home is temporary or for a specific period of time.  Also, the money that you are paying towards rent every month does not get applied to anything of monetary value on your behalf.  Once you approach the end of your rental period, you must sign another lease or you must relocate, with no return of the monthly rent payments (with the exception of your deposit).  This is not meant to discourage home rental.  There are several advantages of renting.  This choice is based on individual circumstances. 
 
Owning a home is more of a permanent situation, something viewed for long-term needs.  Also, the money that you are paying towards the mortgage every month builds equity in the home, which is of monetary value on your behalf.  Once you have paid off the mortgage, you do not have to requalify for another loan or you do not have to relocate.  You now have an asset that significantly contributes to your net worth.  You are positioning yourself to leave a legacy to your loved ones.
 
Term insurance is similar to renting a home.  Term life insurance is for a specified period of time, typically 10, 20, or 30 years.  Once the period of 10, 20 or 30 years have been reached, you will have to requalify for a new policy. The new qualifications are based on your new age and your new health condition.  If health issues have developed over the years, you may not qualify for a new policy.  Or, the premium for the new policy may be significantly increased to account for the advanced age and the new health condition.
 
Although term insurance is temporary, it is more cost effective.  The premiums for the term insurance are typically less than premiums for permanent insurance.  However, the term insurance premiums will increase throughout the coverage period, typically on an annual basis.
 
Permanent insurance is also referred to as cash value insurance.  This type of insurance is similar to owning a home, as they both provide monetary value that can be accessed and used on your behalf or on the behalf of your loved ones.  Both home ownership and life insurance are instrumental in creating a legacy for your family. 
 
Permanent insurance can last up to the age of 120, allowing the coverage to be for the full life of the insured.  Although permanent insurance premiums are higher than premiums for term insurance, the premiums remain the same, level, throughout the life of the policy.  Once the life insurance policy is effective, there is no need to worry about requalifying for coverage.  As long as there is no lapse in coverage, the policy continues as is even through developing health concerns as well as advancing age.
 
The decision between term insurance and permanent insurance is based on what guarantee you want to provide for your family.  Since the unexpected is in fact the unexpected, you do not know when it will occur.   However, you do know that you want to provide financial protection for your family when it does occur.  Both types of insurance will provide financial protection.  However, do you want to provide financial protection for a limited amount of years or do you want to protect your loved ones for a lifetime?  You must decide which guarantee is best for your family.