Life insurance might come in handy for you or your family at any stage of life. However, depending on where you are in life, your policy needs might vary. So, too, might the conditions and premiums available under your coverage. To ensure you get the right policy, keep a few key policy details in mind. This is especially important as you get older, because older people with the wrong policy might wind up paying too much. Consider how your costs might vary depending on the type of plan you buy.
Term Life Insurance
Term life insurance lasts only for a certain number of years. They will include expiration dates, and after that date passes, the policyholder no longer has coverage. People usually buy term policies while they are young and want the money in their policy to meet a certain need in the event of their death.
A term life policy will include a premium that the policyholder regularly pays. It also includes the death benefit that it will pay the beneficiary upon the insured person’s death. Both values will remain the same throughout the policy term if you don’t request to change the death benefit.
However, there is a separate type of term life insurance called decreasing term life policies. Under these policy structures, the death benefit you have will begin to decrease over the life of the policy.
For example, a decreasing term policy might offer $500,000 upon enrollment. If you have a 15-year term, for example, that $500,000 will drop exponentially each year. The policy will reach $0 coverage at the time the policy terminates. Many people use decreasing term life policies by tying them to diminishing debts, like mortgage payments, that they will pay off over time. However, your premium costs will remain the same over the life of the policy.
Whole Life Insurance
A whole life insurance policy is one that remains in effect all your life if you continue to pay your premium. In most cases, your policy’s death benefit will remain the same all your life. Some whole life policies also allow cash value investment incentives. You can use the cash value as a source of income while you remain alive.
Though your death benefit will remain the same throughout your life, you might see your premium costs rise over time. As you age, your risks of death will go up, too. As a result, your insurer will have to raise your premium in accordance with this risk. Therefore, you are more likely to pay more for your coverage as you get older than you did while you were young. All the same, you can work with your agent to determine the best way to keep your whole life coverage affordable.