Life insurance only seems complicated
Like just about any financial product, life insurance comes with some jargon. But it’s all fairly straightforward, says Patrick McGonigle, a CFP professional at wealth management firm Homrich Berg in Atlanta.
Broadly speaking, there are two types of life insurance:
Permanent, which is meant to cover your entire life.
Term, which lasts for a limited number of years.
Most people will end up buying term, McGonigle says, because the monthly premiums are substantially less.
“Think of it like renting a house versus buying a house,” he says. “With term insurance, you are covered for a set amount of time, much like if you were renting. After your term ends, you are no longer covered.”
Permanent life insurance, on the other hand, is “for those with a lifelong need for insurance,” he says. “Like buying a house, as long as you continue to pay the mortgage (or the policy premiums, in the case of life insurance), the home, or policy, is yours.”
Deciding which product is right for you can present some challenges, but a reputable professional should be able to walk you through the details, McGonigle says.