Determining your coverage need
Once you understand the different types of insurance, it's time to figure out how much coverage to get.
First, understand how the type of insurance you choose depends on your coverage needs
There are 2 types of life insurance (term and permanent) as well as several subcategories. If your insurance need is for your lifetime, then permanent insurance, such as universal life insurance may be an appropriate solution. If your insurance need is primarily for a specific period of time, such as your working years, then term life insurance may be right for you. The most important part to know in terms of coverage needs is the difference between term and permanent life insurance.
Term life insurance:
- Covers you for an amount of time you choose
- Pays your beneficiaries a predetermined amount of money
- Can be helpful for the loss of income
Permanent life insurance (whole and universal):
- Generally covers you for your entire life
- Pays your beneficiaries an amount based on the type of policy you choose
- Can be helpful for loss of income or transferring wealth to your heirs