There are two types of life insurance– whole life (sometimes called ordinary life or permanent) and term. If you have life insurance, try not to let it lapse if others are dependent on your income or wage-earning capacity. Your policy could be expensive or impossible to replace when your financial situation improves. Owners of whole-life, variable and universal insurance policies can borrow against the cash value or use their accumulated dividends to keep the insurance in effect. The cash value of a whole life insurance policy may also be used for other expenses. Remember, this loan reduces the face value of the policy until it is repaid.
You may have had group term life insurance through your employer. This is pure protection without a cash value or savings feature. If you are uninsurable elsewhere, you may want to convert your former employer’s group plan into an individual policy. Check with your employer about converting the policy. Individual term life insurance usually provides maximum protection at the least cost. It insures your life for a fixed period of time–usually 5, 10, or 15 years–and benefits are paid if you die within that time period. Shop around; there is a big difference in term policy prices.
Review your needs before talking with an agent. Evaluate any income coming into the household–spouse’s income (if any), interest, unemployment benefits, your debts and your family’s living expenses to help you decide what you can afford in regard to insurance.
Make note – when purchasing term life insurance, read the fine print. A point to consider, if you don’t pass away during the term it is like renting an apartment and when you move out you don’t own it, you d’t have any cash value or own life insurance if your passing isn’t in the term.