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Which type of life insurance is best?

It's important to understand your life insurance options in order to choose the best type.  Getty Images/iStockphoto

When it comes time to buy a financial product or service, it pays to do your homework. Whether you're purchasing travel insurance, auto insurance or taking out a personal or student loan, you'll improve your chances of buying a valuable product by understanding your options. 

When it comes to life insurance, it's especially important to make the right decision. Life insurance primarily serves as a financial safety net for your loved ones in the event of your death. It can also provide a cash alternative to potentially use while alive

Life insurance policies range from thousands of dollars to more than $1 million, providing crucial economic support for beneficiaries in your absence. It's important to understand your life insurance options in order to choose the best type. 

If you're in the market for life insurance then start by getting a free online price quote now so you know exactly what to expect.

Which type of life insurance is best?

So, if you're looking for life insurance, which one is the best? As with many financial considerations, the answer to this question is personal. Here are three primary types of life insurance to know - and which could be best for you.

Term life insurance

Term life insurance is exactly that: Life insurance for a set term of the policyholder's life. Common ranges include 5, 10, and 15-year terms. It's also one of the least expensive forms of life insurance on the market. Policy amounts range significantly, depending on a series of factors. But the lower cost is countered by the fact that the coverage will expire when the term ends (and the charge of renewal will be pricier than it was when you initially started). But if you're looking for comprehensive and affordable coverage, term life insurance may be worth pursuing.

Term life insurance is best for: Those who want a robust policy for a reasonable cost (and are willing to forego a cash option available with other insurance types). For younger adults on a budget, term life insurance is probably their best option.

You can get a free price estimate for a term life insurance policy now.

Whole life insurance

Whole life insurance will cover you for your whole life (hence the name) - but it will come with a higher price tag. Because the policy has no real expiration date - and due to its much-desired cash option - the cost of a whole life insurance policy is more expensive than term life insurance policies. Still, the benefits of whole life insurance are significant, particularly if one plans on tapping into the accumulated cash reserves to pay off debt or to give to loved ones. Just note that it takes time to build up those cash reserves (so you won't be able to access cash immediately after securing a policy).

Whole life insurance is best for: Those who want a policy they can use for cash while they're still alive. Whole life insurance also tends to be better for those who can afford the higher premiums (if you're on a tighter budget then this form of insurance may not be as helpful as term life is).

No-exam life insurance

No-exam life insurance is exactly what you think it is: A medical exam isn't required to obtain this insurance type. If you simply don't feel like taking an exam or if you're worried that the results of the exam would cause you to pay more (or risk coverage disqualification altogether), then no-exam life insurance may be best for you. A no-exam life insurance policy will protect you almost immediately. Since no medical vetting is required, applicants can typically expect an expedited underwriting process. Approval could come in less than a week. But understand that due to the absence of the medical exam, these types of policies may be more expensive than if you opted in for the conventional health vetting that an exam provides insurers.

No-exam life insurance is best for: Seniors who want coverage but don't want to risk having a medical exam ruin their chances for coverage. This insurance is also beneficial for adults who want a policy quickly (and can afford the corresponding premiums).

The bottom line

There are a variety of life insurance policies to choose from and the best kind for one person may not be the best for you and vice versa. It's critical to first understand why you want life insurance (what goals you want to accomplish). Then determine what you can afford. Based on the answers to those questions, you can then find the best life insurance for you and your loved ones.

Get a personalized price quote now or use the table below to review some top providers. 

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