What type of life insurance coverage we should have is a hotly debated topic amongst insurance agents and financial planners. There are many different kinds of life insurance available, ranging from the very simple term life insurance, in which your loved ones are paid a set sum of money if you die during the term while your policy is in force, to more complex cash value policies, some of which are tied to investment programs.

While there are dozens of variations on the main themes, life insurance comes in two basic flavors: permanent and temporary. Permanent insurance comes with names like Whole Life, Universal Life, and Variable Life. Term insurance also comes in a number of varieties, the main differences being how long the term is to last, how often it can be renewed, and whether or not the price will go up and when.

Conveniently, life insurance needs also come in two varieties: permanent and temporary. Permanent needs are expenses that your family is going to have when you die, whenever you die. Whether it’s tomorrow or when we’re 98 years old, our family will have to pay for some kind of final expenses, be it a funeral or a cremation. These expenses currently average over $7,000. Of course, if we live a long time, the prices for final expenses, just like everything else, will go up.

Temporary needs are just that. Temporary. We all want our kids to go to college, and it’s a good idea to have life insurance to pay for it in case something happens to us, but we don’t need that coverage anymore after junior has his Maters in Engineering. Mortgages and loans likewise present expenses we would want to cover, but these expenses eventually get paid off.

So, what should we do? If we buy term life insurance, we won’t have our final expenses covered, assuming we outlive the term. But, if we buy permanent life insurance, we will end up paying for a lot more insurance than we need, to say nothing about the fact that permanent coverage is much more expensive than term as is.

While there’s no one right answer for every situation, for many people the best thing is to have some of both. Work with a trusted insurance agent to determine what life insurance needs you have. Then, cover the permanent needs with permanent insurance and the temporary needs with term insurance. For most, at least those in their earning years, this will mean a small whole life policy and a much larger term insurance policy.

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