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No one likes to think about it, but planning for loved ones’ financial security should anything happen to you is something everyone needs to address. We believe protection is a very important part of your financial strategy to protect what you've worked hard to build.
Keep in mind that your life insurance needs can change with your life and become more complex over time. Likewise, if you’re married, providing for a family and carrying a mortgage, you may need more life insurance coverage now than later, when you’re retired, the kids are grown and the house is paid off.
We generally recommend the needs-based analysis which takes both your immediate cash needs, and future income requirements into consideration in the event of an untimely death.
What's most important is to make sure you have enough when you need it by performing an insurance review. That's where your local Edward Jones advisor can help. With a better understanding of your family's situation and needs, along with our tools and resources, your Edward Jones advisor can come up with options that make the most sense for you.
But what type of life insurance should you buy? The answer to this question depends on your situation.
Basically, there are two types: term and permanent.
Term covers a specific time frame during which you are essentially "renting" the insurance. You pay the premiums but do not build up any cash value. When the term is up or you stop paying the premium, the coverage ends. This insurance can be relatively inexpensive (depending on your age and health status) and is a good option if you need coverage for a certain period of time – for example, until the mortgage ends or the kids graduate from post-secondary education. In general, we recommend term insurance when you're looking to insure a time period of less than 20 years.
But if you have a longer-term need (greater than 20 years), permanent insurance may be a better option. When your "term" insurance ends, you would have to purchase a new "term" to continue coverage. This is an important consideration because the premium might be higher for the new term – and if your health deteriorates, you may not even be able to purchase another policy.
Permanent insurance, on the other hand, is just that: permanent, covering your entire lifetime. Think of this type as "buying" versus renting, as you actually can build up cash value in the policy. This cash value can provide flexibility to pay for premiums or borrow against.
Term insurance is usually the more affordable option. However, you may determine that while you'd prefer to buy permanent insurance, the premium may be too more difficult to afford. Therefore, having both term and permanent may work best for you and over time as your needs become more complex, you also have the ability to convert term insurance to permanent insurance. We believe your primary goal should be to have the proper amount of life insurance coverage, no matter the type.
Your Edward Jones advisor can look at your needs and help you choose the right insurance for you, right now.
Insurance and annuities are offered by Edward Jones Insurance Agency (except in Québec). In Québec, insurance and annuities are offered by Edward Jones Insurance Agency (Québec) Inc.