Life Insurance : What is it Right For You ?

Life insurance provides protection for those who depend on you and should be an essential part of just about any financial strategy.

Many financial advisers say the right insurance policy can be seen as an essential part of any financial strategy.

There are two basic types of life insurance: permanent life and term life. Permanent life insurance will cover you for the duration of your life provided that you pay the premiums necessary to keep the policy in force. It is designed to deliver a generally tax-free benefit to your loved ones upon your death.

In addition, whole life, a type of permanent life insurance, provides guaranteed premiums for the rest of your life, regardless of changes in your health or financial conditions and can generate guaranteed cash value that grows on a tax-deferred basis.

Whole life policies are designed to offer a number of options, such as the ability to plan for future financial needs such as college tuition, care for an aging parent or make a down payment on a retirement home. This type of insurance may be appropriate for those who have significant financial obligations, wish to fund estate taxes upon their death or leave charitable gifts in their memory.

Term life provides coverage for a specific time period-such as 10, 20 or 30 years-and provides a death benefit only if you die during the period specified in the policy. If you survive beyond the end of the term, you will no longer have coverage.

Term life insurance may be appropriate if you are just starting out in your career and have fewer financial obligations. It may also be useful for those who want to protect a long-term financial obligation-such as mortgage or a child's college education-for a specific period of time.

Determining which type of life insurance-or which combination of permanent and term insurance-best suits your situation depends on your own specific needs and financial goals. That's where a knowledgeable financial professional can often be helpful.