Understanding Life Insurance in North Carolina…
Understanding life insurance can be a complicated matter. People buy life insurance for many reasons, but the most important reason is that people want to take care of their loved ones. Life insurance is a great way to do that. Remember, life insurance is not for you, it is for those whom you leave behind. If you are really concerned about that issue, call us and we will help you design a plan that meets your needs and your budget.
In the current environment, there are two basic forms of life insurance, Term and Permanent.
I use an analogy to compare these 2 types of life insurance.
Term insurance is like renting a house. You use it for a period of time as you need it. Once you no longer need it, you simply walk away. It is less expensive, in the short term, than Permanent life insurance. However, you won’t build any value (equity) like you would if you were buying the house, but you also have a lower cash outlay.
Term insurance can be purchased in the amount that you need to cover short-term debts and needs. It’s also possible to also tailor the plans to meet specific time durations (like a 4 or 5-year auto loan for example).
Permanent life insurance comes in 2 basic forms, Whole Life and Universal Life.
There are some differences between these 2 forms of coverage. Both generate a value (equity) and are more expensive initially than term insurance. Just like the analogy of buying a house, these policies build a value that is yours and can be used for future needs. Permanent life insurance should be used to cover long-term exposures like mortgages, replacement of income if you die before your children are finished with their education and many other needs.
The cost for all life insurance policies is based on the amount of coverage you need, your age and medical status. All of this goes into the calculation to determine the cost.
The Good and The Bad
As with most things in life, there are positives and negatives to be considered. Although Term insurance is less expensive in the short term, the cost will increase dramatically if you extend the policy beyond its original term. Those policies can renew, but the cost will be based on your age at that time. Permanent insurance is more expensive in the early years. However, it typically has a lower overall cost, compared to Term insurance, when compared over a 20 year period.
The Final Analysis
Don’t get hung up on which type of coverage you need. Focus on what you want to make sure happens if you die tomorrow. What have you worked so hard for that you want to make certain continues on to the next generation. Everyone’s needs are different, but life insurance can help handle a multitude of needs.
We help many people in Fayetteville, NC with their life insurance. As “Trusted Choice” agents, we work hard to earn your business and look forward to serving you.
Please call our office today at 910.484.6171 for a no-obligation quote, or click here to complete the request form and we will get back with you as quickly as possible.