How to Choose the Right Life Insurance Policy For You


No one wants to think about what happens when we’re not around. This morbid subject is almost taboo, and when you’re choosing a life insurance policy, it’s easy to feel uncomfortable and overwhelmed.

But choosing life insurance is extremely important! Knowing that you’re leaving behind something for your loved ones after you pass can give you a level of comfort and security you may not have otherwise.

It can feel like there are dozens of types of life insurance policies to choose from. So how do you decide what insurance policy fits your life?

Three Major Types of Life Insurance

There are three main types of life insurance you’re going to run into while you’re doing your research and choosing the right insurance for you.

Universal life insurance is a permanent type of life insurance that will always be with you as long as you’re paying your premium. The price and terms can change over time depending on your policy, so be sure to read everything very thoroughly before choosing your policy. Some universal life insurance policies allow borrowing from the policy or the amount you’ve paid into it as well.

Term life insurance is a policy purchased to cover a specific time in your life. They are usually between 10-30 year policies and have no “cash” value. These policies do expire at the end of their term, however, unless you choose a term life insurance policy that is convertible.

Whole life insurance has a set premium that never changes and is always valid as long as you’re paying on your premium. Unlike universal life insurance, you often cannot borrow or change the terms of this policy, so be sure when you lock yourself in that this will fit for you long term. Whole life insurance does provide a very real sense of security to many and is very popular.

The Terms “Convertible” and “Combination,” What Do They Mean?

When looking at the various types of life insurance available to you, you might run into the terms “convertible” life insurance or “combination” life insurance.

A combination life insurance policy allows you to have a payout in instances that do not end in your death, however morbid that statement might sound to you. This could include long-term care situations where you may need money to pay for caretakers.

Combination policies are growing in popularity, and a recent study showed one in five Americans would be very interested in a combination policy. It provides more comfort and security – if something happens and you’re unable to work and need extensive care, or aging care, your family is not “on the hook” for this.

Convertible life insurance is more common at the moment, and allows you to move your term insurance to a whole life policy if you choose, instead of losing the policy. This is a great option for many people who don’t know what the future holds.

How Do I Know What’s Right?

It’s a hard decision, and there is no real “right” or “wrong” answer that we can give you on this subject. Ultimately, the life insurance you choose is a very personal decision.

Calculate your budget, the policy and the coverage you would need if you passed tomorrow. Do you have a mortgage or car payment that your loved ones would need to pay off to keep living their current lifestyle? Consider final costs and how expensive a funeral can be in the United States today.

Then, consider your life expectancy. Is a 30-year term insurance policy enough? Do you need a convertible plan, so you don’t have to worry about what the future holds? Or do you have an illness or issue that could make it so you need a combination plan, so you’re not putting financial pressure on your family before you pass?

Really think hard about your future and your family when making this decision, and always reevaluate your financial and insurance needs every few years. This is the best way to ensure your future is secure and your family is safe.