Which Life Insurance Policy Should I Get?
Life insurance is the MOST IMPORTANT thing for your family when you pass away. However, if they discover you have the wrong type of policy that does not pay out to them (it happens more often than you might imagine), it could be devastating for them. Moreover, all the premiums you paid for all those years would be a complete waste.
Life Insurance, with all its forms and riders, is confusing and challenging to understand. There is a reason people have to take lengthy learning courses and pass an exam to get licensed (and most people fail the first time!). Many nitty-gritty details that only insiders are aware of compound the complexity of the products.
At Octans Insurance, we strongly believe in educating people about the value of life insurance as a financial tool to secure their future. In fact, life insurance can be a tool to address several of life’s problems. If you want to know more, check out our blog section. We will be happy to answer any questions you have about life insurance, so do not hesitate to email us at life@octansinsurance.com.
Here is a simpler overview of the different types of features available with various policies-
| Premium | Cash Value Option | Coverage Length | Death Benefit | |
| Whole Life | Fixed. Never Increases | Yes | Lifetime | Fixed |
| Term Life | Increases when term renews. | No | Temporary (depending on your term, usually 10, 20 or 30 years) | Fixed |
| Universal Life | May Increase | Yes | Lifetime | Flexible |
| Burial/Final Expense | Fixed. Never Increases | Yes | Lifetime | Fixed |
You want to make sure you’re getting the right policy for you from a reliable company that pays out. You may be able to get cheaper insurance out there like all the 9.95 plans you see the commercials on TV about. However, there is no point if they don’t pay your family when you pass away or delay the payment stating various vague reasons.
This is why our trusted agents are here to help you find the right product and the right insurer for your family. All our agents are independent, which means they don’t work for one specific company. We are a brokerage firm and as brokers we prioritize your needs over insurers’ needs. So, instead of pitching a product from specific companies, we will compare prices from different insurers and discuss what the best option would be for you. We can recommend a range of products from different companies based on your needs. You can also get a neutral and accurate assessment of different company policies from our experienced agents. Check out our review page for in depth individual company product assessments.
Now, what life insurance policy is right for you?
Well, there is no easy answer and you’ve probably heard already- it depends on your life situation. For an in-depth evaluation you would need to talk to one of our experts who will hear you out and try to match you to a product. We are transparent in what certain policies can or cannot do for you. So for your convenience, here are the pros and cons of different types of
Policies-
| Pros | Cons | Best For… | |
| Term Life | Simple, easy to get, fast approval. Low-Cost Large death benefit but relatively affordable In certain types of policies (ROP), you can get all your premium back after policy expires. In certain policies, you can convert it to permanent life insurance without another medical exam. No Cash value option that you can borrow against. | Coverage is temporary, it expires when your term is up. Premium will increase if you want to renew your term as your age has also increased. It may be difficult to get life insurance at the end of your term if you are in poor health. | Short term financial protection like Income replacement Mortgage Protection Your spouse or partner can cover the immediate expenses that were previously covered by your income in the event of your untimely death. |
| Whole Life | Permanent, never expires. Guaranteed death benefit. Premium Never Increases Beneficiaries will be paid tax-free death benefits regardless of when you pass away. Some mutual insurers will pay lifetime dividends. Your policy will accrue cash value that you can borrow against if you need it, Accelerated death benefit options and various additional benefits (riders) available. | Relatively expensive because of added benefits. Harder to get approved if you are in poor health but there are policies with guaranteed insurability. Less flexible than some other types of policies where you have the option to adjust your premium if there’s a change in your financial situation. | Those who want lifetime security and leave a legacy for their family. It is a straightforward, permanent policy that can change the financial trajectory of your future generations. |
| Universal Life (several different types of policies fall under this umbrella) | Flexible Premium Less expensive than Whole Life policies. Accrues cash value that you can borrow against. Different riders are available. | More Expensive than Term. Growth of cash value and death benefit is not guaranteed as it grows based on market interest rates | People want permanent coverage that can adapt to future needs. For those who want to leave a legacy and pass on their wealth to future generations. |
| Final Expense | Permanent, never expires. Premium never increases. Death benefit is guaranteed. Medical Exam typically not required Grows cash value that you can borrow against. | Death Benefit is not large and typically ranges from $5000-$50,000 | People who want to cover their funeral/burial or other end of life. More accessible to seniors as these policies get approved despite poor health conditions. |
Now, if you have reached the end of this article, congratulations! That was a LOT of information to take in, and we are sure some of it may still be confusing. Again, it’s worth mentioning that life insurance brokers and agents have to take mandatory courses every two years, studying 45-60 hours (depending on your state), to learn everything about life insurance before they get their license. So, it’s only natural if you are still not sure which would be the best option for you. And that is exactly why we are always here for you! Email us at life@octansinsurance.com or call 617-595-3533.
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