Term is not for life

Certain types of insurance make more sense at different stages of your life. For example, term insurance provides temporary coverage and is a good choice to offset a large debt such as a mortgage, or to provide a source of capital for on-going income. It’s comparatively inexpensive, especially if you’re younger, which is when you will most likely need this kind of coverage — and can least afford it. So when you’re younger, term is often a better choice.

As you age, however, term insurance becomes more expensive. In fact, when you reach your fifties and beyond, the price of term insurance becomes very expensive. Many policies carry clauses that automatically increase the premiums at periodic internals. At this point it makes less sense.

Before you reach that point, review your need for permanent insurance. It’s designed to be in force for life and the premiums stay flat. As well, the policy’s cash value can provide potentially valuable flexibility. You could use the cash value to purchase an annuity to augment retirement income, or borrow against it. The cash value can also prevent your coverage from lapsing should you miss a premium payment for any reason.