What Type of Life Insurance Do I Need?

Many people think life insurance is complicated, and while there are some types of policies that can have more moving parts than others, many times life insurance is easier to understand than other types of insurance policies, like auto insurance or home insurance
 
It’s possible that you already have some life insurance coverage through your employer. This type of policy is called a group life insurance policy and usually provides less coverage than you’ll need for your family. Often, it’s best to think of a group life policy as “extra coverage” and to purchase a separate policy — one that you own — to protect your family.
 
Term life insurance policies are the most common type of life insurance policy — but they aren’t always the best fit. A term life insurance policy offers a guaranteed premium for a certain amount of years, which is the term. In Canada and the US, the most popular term life policy is a 20-year term policy, partly due to its affordability and because it covers the length of many financial obligations, like raising children. However, you’ll find other term-length options, depending on your age, like a 5 or 10-year term policy or even a 30-year term policy.
 
Whole life insurance is another popular option. Where a term policy provides affordable coverage for a limited time period, a whole life insurance policy is designed to provide coverage for your whole life, as the name suggests. Expect premiums to be a bit higher than with a term life policy because a whole life insurance policy will almost always pay a death benefit, whereas a term life insurance policy may or may not. Whole life insurance policies are most affordable when purchased early in life and these policies can also earn cash value, which may be used for loans or even to pay premiums on the policy.
 
Final expense or burial insurance policies are specialized types of whole life insurance designed to provide a smaller death benefit to cover final expenses. Most insurers offer this type of coverage to customers beginning at age 50 to 55.
 
There are other types of life insurance as well, like universal life insurance, which itself has several forms. Universal life insurance is similar to whole life insurance in that it’s considered to be permanent life insurance. A universal life policy has an investment element that can help manage the cost of premiums and grow the value of the policy over time.
 
If you don’t have life insurance coverage yet or you only have a policy through your employer, reach out to your agent or broker to get a quote. In many cases, prices have come down in recent years, making it more affordable than ever to protect your family with life insurance. It all starts with a conversation.