When you are looking for affordable life insurance it is important that you enlist an experienced and independent financial advisor who can help you choose the best policy.  Finding the best policy means working with an advisor who acts as a fiduciary on your behalf, protecting you interest.

Term or Whole Life Insurance?

Term life insurance, also called temporary insurance, covers a person against death for a specific time, the” term”. For example, the term might be until children are grown, or until college is paid for, or until retirement. You pay for the policy period and at the end of the term, the contract or policy expires. If no claims are made against the policy during the term, you don’t receive any benefits after the policy expires, just like auto or homeowners insurance.  It is best to only buy guaranteed or level term, meaning the premium never adjusts or rises as the policy progresses.  This avoids any surprises for you down the road. Make sure that you ask if the rates you receive are guaranteed for the full term of the policy.  Remember those adjustable ARM mortgages?  We all know how those worked out.

Whole life insurance, also called permanent insurance is significantly more expensive than term insurance, is permanent and does not expire (assuming you continue to pay the premiums). It provides coverage similar to term life insurance, but it also provides an investment vehicle. A portion of the premium goes for life insurance, while the rest goes into an investment account. This account can be an interest bearing account or a variable (stocks and bonds) investment account.

Which is better (just an opinion)? One is usually better off with a term life insurance policy.  The substantially lower premiums enable them to purchase sufficient coverage to protect against loss of income. Any discretionary investment funds can be placed in other vehicles (mutual funds, money market accounts, etc.) that are likely to generate returns similar to or better than a life insurance policy.  Whole life insurance is often purchased by people for tax and estate planning purposes.

How To Choose an Agent

Almost all life insurance companies sell their products through agents, rather than directly to the public. Some companies use “captive” agents, who can only represent one company and sell you their proprietary products which may be higher priced than others in the market.

To find the most competitively priced  life insurance companies you will need to use an independent agent who is free to represent several companies.  Additionally, independent agents are compensated 100% by the issuing insurance company.  So, you should never have to pay them a fee or commission.

Ultimately, an independent agent is able to act as a consultant versus sales person while finding you the most competitively priced policy.  They should also guide you through application process until your policy is secured.

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