Are Your Life Insurance Needs Temporary or Permanent?
There are many reasons, other than having a family, that would require additional life insurance, either on a temporary or permanent basis.
For example, you might want to have additional insurance coverage while you owe a mortgage on your house. The policy will pay off your mortgage in the event of your death, enabling your spouse or your family to continue living in the home mortgage-free.
You might also want to have additional coverage for other types of debts. One prominent example is debt you owe jointly with your spouse, such as credit cards or car loans.
Another type of debt is business-related. If you took on debt to start a business, or to either expand a business or sustain it during a rough patch, you might want to have additional life insurance that will pay off those debts.
Term life insurance will be the more cost effective solution, since you can match the term of the policy with the length of time it will take you to pay off your debt.
On the permanent side, if you set up a trust for your spouse or children, you may want to fund it with whole life insurance—that’s a very common practice. A term policy would not be appropriate for this purpose, since the policy will either terminate or renewals will become expensive as you move into old age.
In our next blogpost, we will discuss if you need an investment provision in your life insurance policy.