Insurance is one of the least glamorous topics in personal finance, but it's one of the most important. That's why I wanted to share this article from Bankrate.com with you. It starts out with a question from a reader:
I am married with one child and expecting another. My husband is 46 years old and I am 32. I have life insurance through my employer, but what type of insurance is best to cover me and my children upon my spouse's death?
Here's the answer from Bankrate's expert:
To protect your family against your husband's untimely death, you need a policy written on his life. Term insurance is likely to be the lowest cost form of insurance to meet this need, but it isn't the only choice. Whole life, universal life and variable life are other types of insurance policies that can meet this need. What's right for you depends on how long you need the insurance and what features you want in an insurance policy.
A term insurance policy is in force only over its stated term. It can be renewable for a subsequent term, or may be convertible into a whole-life policy. A basic term-life insurance policy doesn't build any cash value over time. It isn't an investment vehicle; it is solely there to provide the beneficiary with income if the insured dies during the time that the policy is in force.
If you're looking to build cash value, you want the insurance policy to have both the protection feature and an investment component. Whole life, variable life and universal life all provide an investment component, but in different ways.
Personally, I opt for term. I have policies on both me and my wife to protect our family in case one of us passes away. Do you have insurance to protect your family?
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