While life insurance through employers is convenient, but it may lead to a gap in coverage later. Group policies offered through employers are often affordable and may not require a medical exam. However, group policies may only pay out a limited amount, which may not be enough to cover your family’s needs. Additionally, you may not be able to take your life insurance coverage with you if you ever change jobs. It is also important to keep in mind that the older we get, the more costly life insurance can be. Imagine losing your job – and life insurance through your employer – just a few years before retirement. Having a personal policy to supplement your employer-provided policy can make sense.
Types of Policies
There are two different types of life insurance: term and permanent. Term life insurance has guaranteed level premiums for a fixed policy term, usually 10, 20, or 30 years. The premium will likely go up if you maintain the policy after the initial term is up. This type of policy is a great option for those on a budget as it generally is more affordable than permanent policies. It’s also go for those with immediate financial concerns, like a mortgage or a child heading off to college.
Permanent life insurance provides coverage for the rest of your life, as long as premiums are paid. Permanent life is made up of two main policy types: whole and universal. Whole life insurance policies has permanently level premiums and can also generated cash value that can be borrowed against. Universal life insurance is a much more flexible option. You can adjust size of the premium amount, benefit amount, and accumulation portion, within the policy limits. You can even build up cash value to pay your future premiums!
Juvenile Life Insurance
Unlike 529 college savings plans, a child’s life insurance policy can be used for purposes other than education expenses. Your child could use the cash value of their insurance policy for things such as starting a business, helping them purchase a home, or covering wedding expenses! It’s best to purchase life insurance as soon as possible, as the earlier you begin the policy the longer it has to build cash value. However, this isn’t the only advantage of a children’s life insurance policy!
Additionally, getting a permanent life insurance policy now means they won’t have to worry about qualifying as an adult later. Juvenile life insurance policies guarantees the future insurability of your child, regardless of their future health or lifestyle. It doesn’t even require a medical exam! Purchasing a life policy for your child now can also help them get the best possible premium rate, as costs tend to be much higher as an insured ages. A well thought-out life insurance portfolio can be a great asset for your children or grandchildren!