Life insurance – you hear about it often, yet it still seems like a confusing topic. With so many products, solutions and varying opinions, it can be difficult to decide which type of life insurance will best suit your needs and protect your family if the unexpected happens. As a Texas physician, the two main types of life insurance you should familiarize yourself with are Term Life insurance and Permanent Life insurance. Below you will find must-know information regarding both types, in addition to each policy’s pros and cons. Keep this information handy when it comes times to purchase your policy.
Term Life Insurance
A Term Life insurance policy will help protect you and your family for a specific time frame, anywhere from 5 to 30 years in most cases and may be available at an affordable cost. This product is designed to help people purchase a policy that will help protect them when they cannot afford to purchase Permanent Life insurance (if appropriate), or if they only want a policy for X number of years.
Who Needs Term Life Insurance?
-
Term Life may be an ideal product for those who are underinsured and would like to supplement their coverage.
-
It may be a recommended policy for those who want to help protect their family from stress and financial hardship in the event of untimely death.
-
Term Life insurance may be the product of choice if your protection needs are going to be higher than normal for some time, for example, when you are starting a family.
What are the benefits to Term Life Insurance?
-
Affordability – Term Life insurance is typically more affordable than Permanent Life policies, as they are offer a death benefit and do not typically have any cash value before time of payout.
-
In some cases, a medical exam is not required.
-
Your policy is independent from employment and pension plans. You own it (as long as you pay your premiums).
What are the considerations to Term Life insurance?
-
A Term Life policy will not typically build any cash value.
-
Your coverage will expire when the policy time frame ends.
-
Term Life insurance policies can be level, annual, renewable or decreasing. Keep in mind when choosing a policy that if you choose a level Term Life plan, your premiums will not increase as get older.
Permanent Life Insurance
Permanent Life insurance builds life-long insurance protection that can never be canceled by the carrier as long as you pay your premium. It also builds a guaranteed cash value, again, provided premiums are paid. This cash value amount can be used in the future for any expense you need help with via a loan against your policy. Keep in mind that loans taken against the policy, and not paid back, decrease the amount of death benefit available.
Who Needs Permanent Life Insurance?
-
Anyone with a long-term need for life insurance.
-
Those who want their life insurance to accumulate a cash value they may want to borrow against at a later time.
What are the benefits to Permanent insurance?
-
You build a cash value in the policy.
-
Your premiums will not increase as you get older.
-
Like Term Life, the policy is independent from employment and pension plans – you own it.
What are the considerations to Permanent Life Insurance?
-
A main consideration with Permanent Life insurance is initially you will experience higher premiums than with Term Life, but then they remain level for the life of the policy.
3 Critical Reasons to Purchase Life Insurance
Now that you are fully equipped with the benefits and considerations to each type of policy, let’s quickly review why you need life insurance in the first place.
Protecting those you love. Your family may be able to move forward without the stress of wondering how they will financially survive. You will also help solidify your children’s and spouse’s future by providing them with money to pay for college, mortgages, monthly expenses, etc.
Death should not equal debt. Debt is a tremendous burden for anyone, but it is even more difficult to deal with when someone is grief stricken. A life insurance policy will help offer you and your family peace of mind that in the event of your death, funds may be available to help cover debt and finances.
Unexpected events. If you have an unexpected emergency or an abrupt onset of an illness, with a Permanent Life policy, you might be able to request a loan or withdrawal from the policy to help your household run smoothly during your hardship.
At TMAIT, we believe purchasing life insurance is caring for your loved ones. Not only does it create options for your family, but it also helps protect savings and lifestyle. For many physicians, a combination of policies is an economical and efficient way to cover life insurance needs. Speak with an experienced insurance advisor today to learn which may be best for your family.
