Everyone knows that they need some type of life insurance, right? If you’re like me, you want that peace of mind knowing that your family is going to not struggle so much after we die. That being the case, what is the best life insurance plan that we should choose?
I asked this question to a good friend of mine who is an insurance agent. He’s (Dez Davenport) a really good one too. He brought up a few really good points that we should think about to at least get closer to what is the “best” plan/policy for us.
- Do you have a mortgage? If you do still owe on the house, we may want to take that into consideration. Getting a mortgage insurance policy could help in paying off the home, so that our family doesn’t have to worry about where they are going to live.
- Do you have any medical problems? Many policies will require a medical exam, or for us to disclose all hospital visits and illnesses. Even though we may want that million dollar term policy that’s dirt cheap, maybe that’s not realistic if we have some medical conditions right now.
- Do you want a policy that won’t disappear or become too expensive? A major benefit of buying a whole life policy is that for most policies your payment will stay the same for life. Unlike term insurance, a whole life policy does not expire after a certain time. For instance, if you buy a whole life insurance policy today, you can continue making your same payments, with the same amount of coverage, even if you are diagnosed with cancer 11 years from now. Having that peace of mind has a lot of meaning to many of us.
- Are you wanting to get the highest policy amount, for the least amount of money? This is where term life insurance comes into pay. A great part of most term policies is that they can be really cheap! How cheap? If you’re young and in good health, a $100,000 term policy may be as cheap as say $20 or less a month. The only problem with term is that it does expire in a set number of years. For instance, if you buy a 10 year term policy, and you get cancer in 9 years, you’re in trouble. When you do to renew the policy, you can expect to not be able to buy that term policy for another ten years.
Another great topic that Dez brought up with me is “why are you buying insurance?” That may sound like a silly question, but think about it.
If you are buying a policy because you want to be buried, and you don’t want your family to worry about coming up with the money to pay for it, that should be the goal. For you, the best insurance policy is one that pays off your burial expenses. Let’s say that you should be able to pay for your funeral with $20,000. In this scenario, a $20,000 whole life policy makes a lot of sense.
If your goal is to just cover the next ten years or so, while your kids are still at home, your best bet may be to go with a ten year term policy. While the kids are at home, it may be really tough for your spouse to raise them and maintain the household. You can get the most “bang for your buck” in this scenario with a term policy.
So, what’s the best insurance policy? I think the answer depends upon the individual. Getting to understand your goals and needs will certainly bring you closer to an answer.