When a loved one dies, financial matters are the last thing a family wants to think about. Selecting the right life insurance policy lets spouses, children and other survivors focus on the healing process, rather than the financial turmoil that can accompany a family member's death. But picking the right plan isn't always easy-there are key things to think about when choosing the best life insurance policy to fit your needs.
The first question to consider is what form of life insurance will fit your needs best: Term Life Insurance, which lasts a finite amount of time, or Permanent Life Insurance, which can last throughout your lifetime.
With Term Life Insurance, you can choose when your coverage expires-typically 10, 15, 20 or 30 years down the road. The monthly premiums you pay depend on the amount of coverage you select and the length of term period you chose. If you pass away before the end of the term period or policy expires, your beneficiaries will receive a lump sum payment.
Three key benefits of Term Life Insurance include:
- It's generally less expensive than Permanent Life Insurance
- Your heirs won't have to pay taxes on their cash benefits
- You have the option to convert to Permanent Life Insurance within a limited amount of time at a later date
If you'd like to learn more, you can get a free Allstate Term Life Insurance quote
Permanent Life Insurance can provide you with a lifetime of insurance coverage. Unlike Term Life Insurance, Permanent Life Insurance allows you to build cash value that can be accessed in addition to your death benefits. However, this ability to accrue cash value means your annual premiums would likely be higher than with Term Life Insurance.
Three key benefits of Permanent Life include:
- Coverage that never expires (as long as your premiums are paid)
- The ability to tap into the policy's cash value with potential tax advantages
- Several types of policies to choose from
You can select the best fit out of four Permanent Life Insurance options:
Whole Life Insurance: With Whole Life Insurance, you pay the same premium each year for the course of your life. (If you start young, your annual payments will likely be lower.) You'll enjoy a guaranteed interest rate, allowing the plan's cash value to grow over time. And as long as you continue to meet your premium obligations, you can take out a loan against the plan, then pay it back at the current policy loan interest rate. You can inform your decision using Allstate's Whole Life Insurance vs. Term Life Insurance online calculator.
Universal Life Insurance: Unlike Whole Life Insurance, Universal Life Insurance gives you the flexibility to modify when and how much you want to pay in premiums, as long as your policy has achieved a certain level of cash value. You may also have the ability to adjust the amount of death benefits survivors receive without changing policies (although a medical exam may be required). Consider using Allstate's Universal Life Insurance vs. Term Life Insurance calculator to help compare your options.
Variable Universal Life Insurance: This type of insurance allows you to invest your net premiums-giving you the opportunity to achieve a higher rate of return than a guaranteed rate. Your death benefits will not be impacted by the performance of premium investments; however, the cash value of your plan could decrease if the investments perform poorly. You can use Allstate's Variable Universal Life Insurance vs. Term Life Insurance tool to learn additional details.
Equity-Indexed Universal Life Insurance: Having an Equity-Indexed Universal Life Insurance policy means that the cash value of your plan will be pegged to a mainstream market index, such as the S&P 500®, with predetermined growth rate maximums and minimums.
You work hard to make sure your loved ones are taken care of. Help ensure that loving care doesn't stop once you're gone by getting a free life insurance quote online, or contacting an Allstate financial representative in your area to learn more about these life insurance options.