If you don’t already have some amount of life insurance coverage, this is probably the time to make the move.  While none of us likes to think about any unfortunate things happening, the sensible, practical way of hedging against unexpected is to put in place a plan to provide for your family.  There are a variety of life insurance plans available, which have different programs for coverage and costs.  One of the simpler and more affordable policies is called term insurance.  It is called “Term” because it provides life insurance coverage for a precise time period, or term.  A very commonly chosen term would be 20 years.  This means that you paying the cost, or what’s called the premium for the period of 20 years.  You also have life insurance coverage for that same period of time.  The agreement also provides that your coverage terminates at the end of the term.  After that time, if you want life coverage, you would need to start a new policy.

This type of life insurance is commonly recommended to young couples just starting their family.  The primary reason is that this type of insurance is much more affordable than the other popular forms of life coverage.  While a thorough review of the most popular types of insurance coverage is not the purpose of this article.  We will provide some generalized comments and information points to be used as background for you own evaluation of this important part of your family financial program for your new family.

Simply put, there are two main types of insurance coverage.  One is the term policy we have briefly discussed.  It is only life coverage, and for a set period of time.  It can be arranged for 10, 15 or 20 year periods.  The cost or premium can be paid monthly, quarterly of even annually.  It is life coverage in its simplest form. 

The other main category of insurance is referred to as permanent insurance.  These are the types of policies that provide death protection from the time the policy is put in force until death.  These types of policies have many variations.  Most are a combination of life coverage and some form of savings component, where some amount of your premium is set aside into an account that earns interest or goes into some form of investment program like mutual funds. 

These policies and the amount of investment choices and accounts can be quite complicated to understand.  The major point to remember is that the difference in the monthly premium for the same amount of coverage for a term policy and a “permanent” policy, such as a “Whole Life” or a “Universal Life policy” is quite substantial.

If you get a quote for these different types of coverage you will quickly notice a large difference in the premium between these.  This is why many people decide on term. Particularly for young families where money is dear and there are so many things needed.   

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