For most people, life insurance isn’t exactly a fun topic to think about, since its nature implies your own mortality, but it’s extremely important to consider if you have dependents like a spouse, children, or aging parents. A life insurance policy is the best way you can give your family financial security in case of a loss of your income or to help them deal with final expenses, mortgages, or any other outstanding debts. You might be surprised to learn, however, that life insurance can be good for more than providing your beneficiaries with the death benefit. Some types of life insurance can be used as ways to save and invest, as well.

3 Tips for Choosing a Life Insurance Policy

Before you start investigating specific life insurance companies to try and find the best life insurance quote, you’ll need to make some important decisions. Here are three useful tips for choosing the best life insurance package for your unique situation.

1. Decide how long you need coverage for.

One of the simplest, and most important, things you’ll need to decide is whether you’ll need permanent coverage. Having permanent coverage is often the best option for people who are the primary (or only) income earner for the family or for those who want to have extra protection against unforeseen events.

Some people, however, may find that they only need coverage to cover specific financial goals. Examples could include covering children through college or ensuring income replacement until they’ve paid off their mortgage. For these situations, term life insurance may be the best option. If you opt for term life, you’ll choose a period of time that you and your insurance company agree upon to guarantee a death benefit to your beneficiaries. If you die after the term is up, though, your beneficiaries will get nothing. This is why it’s crucial to either renew the term immediately or convert it to a permanent policy if you decide you need it for longer. A term policy generally provides the best rates for monthly premiums compared to other options.

2. Consider additional value.

While you’re primarily buying life insurance for the death benefit, that isn’t necessarily the only value you’ll be able to get out of it. It’s true that term life doesn’t offer any additional benefits, but permanent life insurance does. With a traditional life insurance policy, you can build cash value in addition to the death benefit. The policy’s cash value will build itself at an agreed-upon rate, but you can increase the rate by paying monthly premiums in advance. It’s also possible to borrow against or withdraw from this type of policy, but you’ll have to be careful to avoid dipping into the death benefit.

Universal life insurance policies also offer permanent coverage, as well as savings/investment value, and they have lower rates, similar to a term life insurance policy. It may be more difficult to get a high amount of coverage if you go this route, though. Still, if you’re interested in investing, a variable life insurance plan can be a great option. These policies allow holders to invest advance premium payments into subaccounts that act like mutual funds. While market changes can make this option riskier than other plans, variable plans also provide the highest growth potential.

3. Determine how much coverage you need.

Just as not all insurance products will have the same rates for premiums, not all insurers will offer the same levels of coverage. Your age, personal health, and lifestyle will how to have an effect on the kinds of rates you can get and how much coverage you’ll be eligible for. For example, a tobacco user will have a harder time getting cheap rates than someone who never smokes. Before narrowing down your choices of life insurance companies, it’s a good idea to speak to a financial advisor to figure out an appropriate coverage level for your goals that you can also afford.