It's something that none of us like to think about, but one day we will all leave our loved ones behind. Life insurance is a great way to make sure that your family isn't stuck paying the debts you leave behind, and it can also provide financial stability for them long after you're gone. There are two main types of life insurance- term coverage, and whole or permanent life insurance. Each type of coverage has its benefits and drawbacks. With today's tough economy, you might think that it's not financially feasible to buy life insurance. However, if you think of it as an investment in your family's future, the decision will be much easier to make.

The Pros of Term Life Coverage

It's less expensive than whole life coverage. Its low rates allow people to purchase policies that have a higher face value than they would otherwise be able to afford. Here's an example- a 45 year-old man that doesn't smoke could buy a $1,000,000 policy with a 30-year term for a little less than three thousand dollars a year. That's about four times cheaper than a permanent policy with a similar face value. Term life insurance is easy to buy. All you have to do is decide how much coverage you need, and how long you'll need it. Then, you can compare prices and plans to find out which will suit your needs.

Term life insurance is meant to bridge a gap. Keep in mind, life insurance is meant to provide for your family after you're gone. After your kids are grown and gone to college, and you and your spouse are retired, you won't have any dependents at home. Term life coverage is ideal for this situation-it covers you and your family when you'll need it most.

The Cons of Term Life Coverage

Unfortunately, as its name implies, term life coverage expires. If you buy a term life policy that expires, and you still need coverage, you'll have to start all over again. And, the older you are when you apply for coverage, the harder it will be to find it. If you aren't in the best of health, you may not be able to get coverage at all.

If you live longer than the limit on your policy, or if you cancel it, you get nothing back. Assuming that nothing major happens to you, you'll still be alive and kicking when your policy runs out. That means that you've paid thousands of dollars for a policy you got no benefit from, and you won't get anything in return.

However, if you invest the money you've saved by going with term life insurance over a more expensive whole life policy, you will most likely come out ahead. If you'd rather have the reassurance of knowing that the policy amount will be there when your loved ones need it most, then a whole life plan may be just what you need.

The Pros of Permanent (Whole Life) Insurance

Permanent coverage has cash value that will grow over time, and it's tax deferred. If you've set the plan up properly, you might accrue enough cash value to be able to stop paying premiums once you reach a certain age, or you may be able to borrow against the cash value at a reduced tax rate. Unlike term life insurance, in which premiums will rise after an initial period, the premium on a whole life policy will remain the same.

Whole life insurance is an easy, albeit more expensive way to make sure that your family isn't burdened by any debts or final expenses you leave behind. Say you have a young child and you want to make sure that they are able to afford to go to college- if you buy a whole life policy when they are a newborn, by the time they reach college age, you will have enough cash value in the policy to finance their tuition.

The Cons of Permanent (Whole Life) Insurance

As we said before, permanent coverage requires a higher initial investment than a term policy. However, if you wait to start a family until you are older, the extra expense may be worth it.

With permanent coverage, you aren't able to choose separate accounts to invest the money in. The insurance company decides how, when, and where to invest the premiums that you pay. Whole life policies are pretty rigid- the premiums and face values are pretty much non-negotiable. The plan you buy today is the same one you'll have twenty years from now, so choose carefully.

No matter what kind of insurance you choose, life insurance is a sound investment in your family's future. Whether you are thinking in the short term, or planning for your later years, life insurance is something that no family should be without.

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