Types Of Life Insurance

By Mike Bell

If you are considering purchasing life insurance, an overview of the available types should prove helpful. This article will briefly discuss the difference between whole and term life insurance, as well as some variations on whole life insurance.

                                   

The easiest way to understand the difference between whole life insurance and term life insurance is to look at what is meant by their names. When you purchase whole life insurance, you are covering your "whole" life - as long as you own the policy, it will pay a benefit when you die. What that benefit is depends on the value of the policy at the time of your death, but you own the policy even if you are no longer making payments on it. Whole life also accumulates a cash value on a tax-deferred basis. In addition, whole life can pay dividends throughout the life of the policy.

Term life insurance, on the other hand, is purchased for a certain term, or period. As long as you die within that period, term life insurance will pay an agreed upon amount to your beneficiaries. It will not pay if you cease to make payments or if you die after the term has expired. In addition, term life insurance has no cash value.

Two other aspects of whole versus term life insurance should be pointed out. The first aspect is that premiums for whole life insurance are higher to begin with, but remain steady over time. On the other hand, premiums for term life insurance are lower near the beginning of the policy, but increase over time. Another aspect is that you can borrow against the cash value of a whole life insurance policy. This is not possible with term life insurance, since it does not have a cash value. There are two variations of whole life insurance that need to be mentioned. The first is a more flexible form of whole life called universal life insurance. With universal life insurance, you can adjust (within certain limits) the premiums as well as the benefit amount over time to suit your financial situation. This is made possible by placing the premiums in a fund that accumulates based on the interest rate. As with normal whole life insurance, this type of policy has a cash value that can be borrowed against.

The second variation on whole life insurance is called variable life insurance. This type is similar to universal life insurance, except that the premiums in the fund are tied to the financial markets rather than to interest rates. While the potential for growth is greater with this type of insurance, the potential for loss is greater as well.

As you can see, there are some choices to be made when considering the purchase of a life insurance policy. Now would be a good time to use some of the other resources at this site to help you decide on the life insurance policy that is right for you and your family.

Choosing Life Insurance

By Joseph Kenny

Take your time in taking decisions, chalk out which one is best suited for you and your family from the policies made available by different insurance companies. Look into your age, condition of health, income, health habits, marital status, number of children and lifestyle.

                               

You must always keep in mind that if you don’t need it, avoid it. No need to insure. Ask yourself how much your family is depending on your salary. If your family can’t do without your earning, you really need life insurance, otherwise no need to worry. It is difficult to say for how much money should you insure. Yes, it depends on your family’s lifestyle and debts. Generally, people keep it at between five and ten times of your annual salary.

It is recommended that if you're under 40 and don't have a family history of life threatening illness, try Term Insurance. It offers death benefit but no cash value. Otherwise, always go for the Whole Life Insurance, as it offers both death benefit and cash value. However, it is much more expensive than the former. As Term Insurance safeguards the policyholder only for a specified time period, it is appropriate for military and young families. It is cheaper than other policy types, but it has no savings feature.

It is also necessary to calculate your total insurance needs by examining the needs at various stages of your surviving family, and purchase insurance to cover the gaps. Don’t forget to review your life insurance plan periodically. You need to be alert when your financial responsibilities undergo a significant change. Be open to talk about the insurance plan with your spouse and let he/she understand the gaps the current insurance are going to fill.

Some points are also needed to keep in mind while buying insurance. Make your check payable to the insurance company, but not to the agent. And don’t forget to get a receipt. Even if you have purchased a policy, have a think and rethink for around ten days. You can always ask for a cancellation and change for an appropriate one with full refund. In case an agent or company contacts you and wants you to cancel your current policy to buy a new one, always contact the original agent or company before making any decisions. And it is up to you whether you try for an expensive one or the cheaper one. But don’t forget to gather maximum information.