What type of life insurance is right for me?

The two most important things to consider when choosing the right type of life insurance for you are:

1. How long your life insurance needs will last. Some policies last for a set number of years, while others last for as long as you live.
2. How much you want to budget for your life insurance. Some plans have investment features that make them more expensive than others.

The two main types of life insurance are term insurance and permanent insurance.  Here are the main features of each:
 
Term life insurance:

• lasts for a set period of time (the “term”) -- typically 10, 20 or 30 years. The policy is in force as long as you keep making payments (called premiums).
• there is no investment feature

Term life insurance is often the insurance of choice for young, healthy people -- especially young families -- because it’s so affordable. The main goal with this type of insurance is to make sure debts such as a mortgage, credit card debts or other types of loans are covered and that the costs associated with raising children -- such as childcare through a college education -- can be met. Term life insurance may also be used to meet other obligations that will end after a known period of time, such as alimony.
 
Permanent life insurance:

• lasts until you die (there is no pre-set “term”), as long as you keep paying the premiums.  
• has an investment feature. Part of your premiums are invested so that they earn money, giving them “cash value.” Under most circumstances you can borrow against the cash value without paying taxes on it. This can be a handy source of additional income, if needed.

Since permanent life insurance lasts for your lifetime it’s a great way to provide money to cover living expenses for a spouse or partner that you leave behind. You have flexibility in deciding how the death benefit will be paid. For instance, you could plan to leave a certain amount to a surviving spouse or partner, along with certain amounts to children, grandchildren, other family members or even charities that are important to you.