Before purchasing a life insurance policy it is important understand your current financial situation and the different options available for you and your family. The most common choice is between whole life insurance and term life insurance and as their names demonstrate term is for a limited amount of time while whole is kept for as long as it is relevant and beneficial. The key to life insurance is having it in place prior to actually needing it because at that point it will be too late and loved ones with financial obligations will be left on their own.
Like all insurance such as automobile insurance and homeowners insurance the key is to hedge against disaster by purchasing a policy in advance so it is there to protect you should something tragic happen. Life insurance is only recommended for those individuals who have others that count on their income to make mortgage payments or provide temporary income through the grieving process. The most common purchasers of life insurance are young couples just starting a family. This is because only one may be working while the other stays home with the children and so at a minimum two individuals will be reliant on some sort of income should the primary income earner no longer be able to provide for the family.
When choosing a life insurance policy it is normally a question of whether to go with a term life policy or a whole life policy. Term life insurance is for a fixed period of time normally 20 to 30 years and if purchased in the mid-20s can be fairly inexpensive which is especially important for families just getting started. The reason why this length of time is popular is because children are normally out of the house and fully educated by 23 to 25 years. It also provides a chance for the individual who stayed at home to start earning their own income at the 15 or so year mark as that is when children become teenagers and are for the most part calling their own shots. Whole life insurance, on the other hand, is viewed as more than just a means to cover expenses should the primary income earner no longer be able to do so as it is often viewed as an investment vehicle which can be used in retirement. This is due to the specific structure of whole life insurance policies that build a cash balance from premiums paid.
In reality, average consumers are not expected to know the specific intricacies and differences between every type of life insurance policy and the additional policy riders which can be used to supplement basic coverage. It is important that as you conduct research when purchasing a life insurance policy that you ask many questions from a few different providers and thoroughly read all documentation. It is hard to get the right answer if you don't know to ask the question which is where research and documentation will provide additional insights before buying life insurance. If you have dependents it is important to purchase life insurance but be sure to buy a policy which is most beneficial for you and your loved ones.