What Is The Best Type Of Insurance?

In the last 12 years of working in and around the Insurance business, I have been asked the question many times. What Is The Best Type Of Insurance? The question is usually asked in regards to Whole Life Insurance or Term Insurance. While some financial experts in the past have discouraged the purchase of Whole Life Insurance, others have encouraged the purchase of Whole Life. The wording in the brochures and contracts can sometimes be overwhelming for the client , and no decision is made rather than making an educated decision.

It is my goal in this article to clear some things up concerning this matter. I sell both Term Insurance and Whole Life Insurance. If I could make an honest and professional suggestion to a young consumer (Under 50 Years Old), I would encourage them to purchase both Whole Life and Term Insurance, especially if they have a mortgage, and have debt.

Term insurance is purchased to usually protect a mortgage, pay off debts, provide an income for young children that are left behind, etc. You can usually purchase term insurance cheaper than any other type of Insurance. Term is usually purchased in increments of 1-40 years. After the Term expires you will drop the policy and lose coverage, be forced to pay higher premiums, in some cases you can convert the policy or a portion of the policy to whole life, or you will have to renew the coverage. My advice would be to purchase term insurance while the family is young, and you are still paying for the mortgage, etc. In most cases after you retire, Term Insurance is going to be too expesive. Whole life Insurance is coverage for the entire life. The premiums never increase, and you never lose coverage as long as you pay the premiums. Whole Life Insurance is usually higher than Term Insurance.

I am finding that many people have purchased term when they were healthy and in their 30's and 40's. They relied solely upon those term policies to cover all of the expenses they will incur after death. The biggest mistake they made is that they have relied solely upon this policy. My father used to tell me, "Don't put all of your eggs in one basket." This is exactly what so many have done. They purchased term for a short period of time, and made no provisions for when the Term policy is going to expire.

I have been called upon many times to visit with clients that had a term policy in the past, but didnt renew, or convert in the allotted time, and at 60+ years of age, they have no insurance. While I can usually help them, it is much more difficult to get the adequate coverage and rates they could have received when they were purchasing Term Insurance at 30 years old. In many cases they are now taking medicine, having health problems, etc. and they have no insurance to even cover the cost of a funeral.

So this is what I recommend you doing if you are under 50, and asking the question what is the best type of Insurance to purchase? I recommend being wise. Purchase a term policy to cover your mortgage, provide an income for the young family, pay off all of your debts, etc. But while you are young and healthy purchase a whole life policy that will be there after the Term expires. You will have locked in the rates, and be may steps ahead of the game. The face amount of the whole life policy in most cases will be less than the term amount. I would suggest at least purchasing 10,000 - 25,000 of whole life in combination with your term.