Life Insurance. Those two words together just scare me. When you’re younger, livin’ the good life, and really only thinking about what your weekend plans are, the thought of Life Insurance and what it means never crosses your mind.
It wasn’t until we had a baby that my husband said to me one day, “we need to get a Life Insurance policy on you. If something ever happens to you, I need to continue to work to provide for MB (our son) but also need to think about the things you currently do that I can’t do if I’m working.” Furthermore, we needed one for my husband as well – after all, he’s the current breadwinner of the family. If anything happens to him, I need to be able to work but also make sure all our financial needs are met. Despite recently going to work for an agency, I had no idea about Life Insurance; what it covers, how it works, how much it costs, etc. (I’m in marketing- not a licensed agent…so cut me some slack!) After sitting down with one of our licensed agents, here is what I learned.
There are basically two types of Life Insurance – Term and Permanent (aka Whole Life). When I was learning about Term, in my head, I compared it to car insurance. It’s there if you need it, but if it expires or you cancel it, you don’t get the money back. You have the protection for as long as you have the policy (for a pre-determined amount of time). Permanent/Whole Life means exactly what the title implies, the coverage will never end- as long as the premium is paid. Both types of policies have their benefits depending on what your goals are. Permanent is going to have higher premiums, but also accumulate a cash value the policyholder can borrow against or receive upon surrendering the policy.
This is how we determined what type of coverage we needed – our hope is that our son goes to college upon graduating HS (or something to further his learning/career path). When that happens, we didn’t feel the need to have coverage any longer, so for us, Term made the most sense. We looked at it as temporary income replacement for the length of time we needed it – a safety net…just in case.
If you are unsure about the type of policy you need/want or the coverage amounts, that’s what agents are for. I may be a little biased, but our agents are pretty good. As a new mom, it definitely makes me breath just a little easier to know that I have checked that item off of my list!