Life insurance isn’t as complicated, or as expensive, as you might think. You can shop it in seconds and buy it in minutes. Here’s how. Advertising Disclosure: When you buy something by clicking links on our site, we may earn a small commission, but it never affects the products or services we recommend. Though it’s not much fun to think about, getting life insurance is a good idea for most people, because when you die, it provides money for surviving family members (or whomever you have designated), helping them cover costs such as mortgages, unpaid debts, college tuition and your funeral. Most people know this. What they don’t know is what kind of insurance to get, and how much coverage they need. The good news? It’s much, much easier to explore insurance options these days. You can see what’s out there in seconds and even apply and sometimes get coverage in minutes, all from the comfort of your couch. Here’s the lowdown on the kinds of insurance, how much to get and a couple of suggestions on where to get it. Term life: These policies provide a set amount of coverage for a fixed rate of payments for a limited period of time — or term. Under this policy, if you die during the term, benefits are paid to the person you chose as a beneficiary — typically a spouse or children. After the term runs out, there’s no guarantee that you will be able to get the same level of coverage at the same rate. You can either purchase a new life insurance policy at new terms, or let it lapse. It’s a relatively affordable way to make sure there is a substantial amount of money for children or other dependents if you should not be there to provide for them. Term life policies can be set for various periods of time — but typically for no longer than 30 years. “Term is like renting the insurance,” says Aprilyn Chavez Geissler, a board of trustees member for the National Association of Insurance and Financial Advisors. “When you rent an apartment, you don’t get any equity. All the money you pay in is for a period of time; it goes away at the end of the term.” In other words, what these policies provide is pure death-benefit protection for a given period of time. Whole life: As the name suggests, these policies remain in force until you die, regardless of your health, so long as you continue to pay the premium. These premiums are generally higher to start with than those paid for term life policies. In addition to providing death benefits, these policies are also designed to provide other “living benefits,” including guaranteed cash-value accumulation and eligibility to earn dividends. As a whole-life policyholder, you can have tax-deferred access to that cash value to, say, help cover a down payment on a home, to help fund your children’s education, or to provide retirement income. There are a couple of different types that vary in the ways that they accumulate cash value (and the risk of losing cash value) depending on the way that your funds are invested to generate income. From least to most risky, they are: Term life insurance is the best choice for most people, especially for younger people getting their first such policy, according to Jason Dana, vice president of sales for San Diego-based agency JRC Insurance Group, and other experts. It’s typically way more affordable than whole life insurance. Chavez Geissler, who also owns an Albuquerque insurance and financial service agency, says term life insurance is great for young couples with children. For a relatively low monthly premium these policies make sure that spouses and children will have a substantial safety net for getting those kids to adulthood if the insured person dies. Meanwhile, couples can concentrate other funds to pay off a mortgage and save for their children’s college education. “It’s also very often the product of choice when protection needs may be high for a period of time, such as when your family is growing,” according to New York Life Insurance, which focuses on selling whole life policies. “Term life can also be an effective way to supplement permanent insurance during high-need years, such as when family and other financial responsibilities are outpacing income.” Typically there are no penalties for canceling term life policies at any time, but there may be penalties and tax consequences for ending whole life policies early. The downside of term life policies is that they do eventually expire. If the policy was intended to provide for a child, by the time it expires, the beneficiary is probably a self-sufficient adult, and the policy is not needed. Another aspect of term life insurance that policy holders need to understand is that after the first term is over, the premiums typically increase substantially per year. To save money, Chavez Geissler recommends people then start a new term policy or convert to a whole-life insurance policy. Overall, whole life insurance policies are more expensive but they have the advantage of growing in value — with substantial growth potential for the highest-risk policies. Chavez Geissler says the indexed universal and variable universal life insurance plans are best for more affluent people. To figure out what type of life insurance policy and how much coverage you should get, she recommends people consider Debts, Income, Mortgage and Education or DIME: Using the Ethos life insurance calculator, the average cost for a Florida resident male, age 40, nonsmoking with an average credit score: (As Ethos notes on the website, these are only estimates. In addition, it notes that whole life policies are more complex, so it’s best to call for details on premiums and benefits.) Chavez Geissler generally recommends that a couple earning $75,000 altogether, raising two children and paying a mortgage each get a $500,000 term policy for 20 years on their spouse. But even a small life insurance policy can make a difference in the event of a death. “It’s even the small ones, like $10,000 policies, [that] are more important and meaningful to people that are lower income,” says Chavez Geissler. “It’s more profound to the families that are barely making it.” If you’re lucky, you may be offered life insurance through your workplace, which is usually the cheapest option. If not, try one of these two trusted life insurance companies: Ethos and Ladder Life. Ethos is a company that lets you apply online in minutes without getting off the couch. There’s no medical exams, no blood tests, and you can get term life insurance ranging from $100,000 – $2,000,000. And for around $1/day you can get $250,000 in term coverage: less than you might be spending now on coffee.* Simply answer a few online health questions and get a personalized quote in less than 5 minutes. This could be the most important thing you ever do for the people you love. And Ethos is rock solid: They’ve protected more than 100,000 families and have provided over $34 billion in coverage. So, why not check it out? Click here right now for a quick, free quote from Ethos. Ladder Life policies are issued by Fidelity Security Life Insurance Company® Kansas City, MO, Allianz Life Insurance Company of New York and Allianz Life Insurance Company of North America. If you’re under age 60, why not at least check it out? Click here right now for a quick, free quote from Ladder Life. In general, the sooner you get a life insurance policy, the less expensive it’s likely to be. That makes sense, since insurance companies charge premiums according to the risk that the insured will die. You may find that getting a policy later in life can get prohibitively expensive, especially if you have major health problems such as obesity or cancer. “You’ll never be healthier than you are today, and you’ll never be younger,” said Dana, of JRC Insurance Group. “You might as well try to get the life insurance when it’s going to be the least costly.” Every week our podcasts bring you lively money discussions that will give you
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