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You generally buy life insurance for a specific time period or for as long as you live.

If you need life insurance for a certain period of time you should consider term life insurance. It allows you to buy coverage for the amount you need for a specific amount of years at a flat premium. For example, you have 15 ears of payments left on your mortgage balance and can insure that the debt is paid; you could buy a 15 year term life insurance policy. Term life is good for large amounts of insurance for a limited time at budget pricing – you are not building any savings, just protection. Premiums are lowest when you are younger and increase at each renewal as you get older. You may want to also look into convertible term policies if you think your needs may be changing in the coming years – it allows you to convert to permanent life insurance with an increase in premiums. If you want life insurance for as long as you live, you might consider permanent insurance. The policy will pay death benefits whether you die the day after the policy is in effect or you live to 95 years old. Premiums for these permanent life insurance policies are higher, but there is a tax-deferred savings advantage to them. There is ability to borrow against these policies once some level of savings has accumulated. There are a number of different types of permanent insurance policies, such as whole life, universal life, variable life, and variable/universal life.

What happens if you can no longer afford to pay for your life insurance premiums? Depends on the type of policy you have and the terms and conditions.

If you are covered under a Term Life Insurance plan, stop paying and your coverage lapses. Contact the life insurance provider and determine if they can provide some grace period for re-instatement.

If you have Whole Life or Permanent Life Insurance you may have more options. Cash out the policy, accept a reduced coverage amount, check for a re-instatement time period or just let the policy lapse. If you cash out the policy, you will no longer be covered by life insurance and may owe some income tax if the proceeds exceed the premiums paid. If you accept reduced coverage, you will no longer be making payments, but will instead convert to a paid up lower death benefit policy with no cash value. Some insurers will allow you to re-instate your policy by paying back premiums and interest.

You should review your life insurance policies once a year to make sure you are adequately covered for your present situation in life. Significant changes in people’s lives happen every so often and may include:

• Marriage or divorce
• New children
• Purchasing or refinancing a home
• Changes in health
• Financial responsibility of parents
• Death of a spouse
• Inheritance

An insurance agent will be able to help in determining your future life insurance needs based on what life stage your situation is.