What type of insurance should you consider (and what can you afford)?

In general, there are two major categories of life insurance: term and permanent. Think of the difference between the two as “renting” (term) versus “owning” (permanent). Answering the following questions can help you determine which may be appropriate for you.

1. How long do you need the insurance?

Will you need insurance only for a particular period of time – for example, until your children are grown? Or does it seem like more of a lifetime need – for example, as long as your spouse may live? In general, we use the following guidelines:

• Term insurance: An insurance need of typically 20 years or fewer1

• Permanent insurance: An ongoing need (e.g., you want to ensure a certain amount is paid at your death, regardless of how long you live, such as providing for your spouse or for a legacy goal)

2. What can you afford?

Balancing the amount of insurance coverage you need with what you can afford is one of the most important insurance decisions you need to make. That’s why it’s important to work with your financial advisor to determine the appropriate amount and type of coverage that fits within your overall budget. Reviewing your budget also can help pinpoint which expenses to reduce or adjust to address this need.

Your financial advisor can help select the appropriate insurance solutions to best meet your specific needs, including different types and durations of insurance. Additionally, your personal and financial situation will change over time, which means your insurance needs may change as well. For example, you may have purchased a term policy in the past because it was the most cost- effective, but you are now thinking about legacy considerations and more permanent planning.

That's why it's important to review your current situation and coverage with your financial advisor on a regular basis – especially after a life event such as a job change, marriage or new child.

Talk to your advisor to review your strategy to prepare for the unexpected. Together, you can help ensure you have the right amount and type of insurance to provide for your family's financial future.