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Life Insurance

One of the most important types of insurance policies that you can purchase for the purpose of protecting your loved ones against financial loss is life insurance. While most people prefer not to think about the consequences that can result from their untimely death, the reality of the matter is that you ca not afford to not consider this an inevitable factor. Additionally, life insurance is not just for the elderly because contrary to popular belief, death truly knows no age.

How will the costs associated with your funeral arrangements be covered? Will your family have to take on the burden of settling your unpaid debts? Who will take care of your family financially if something were to happen to you? Will they loose their home if mortgage payments can no longer be made? How will your children be able to afford a college education? These are just some of the financial concerns that you need to take into account. It’s also important to be aware of your life insurance options by learning about the different policies that exist and the rates and premiums that are attached.

Evaluating Your Options - Life Insurance Policies, Premiums & Rates

Some of the most popular types of life insurance policies that many companies tend to offer include term, permanent and universal life insurance. Each life insurance policy has benefits as well as drawbacks, which is why it’s necessary to evaluate your options before making a purchasing decision.

Much like the name sounds; a term life insurance policy is designed to provide the insured party with coverage for a set period of time. The exact term for this type of life insurance policy varies, however it can often be renewed on a yearly basis depending on your insurance company. The life insurance premium attached to a term policy is also significantly less expensive in comparison to other types of life insurance policies.

However, one of the disadvantages to a term life insurance policy is the fact that once your plan ends, the coverage is gone and the policy has no cash value. Therefore due to the characteristics of term life insurance policies, most people tend to purchase them as an insurance product only, without the intention of using them as a savings vehicle. You should also know that some insurance companies offer the option to convert the term policy into a permanent life insurance policy if your needs should change down the road.

On the flip side, permanent life insurance, often referred to as whole life insurance provides coverage for an insured person’s entire life. Unlike term life insurance policies, a permanent policy can accumulate into cash value, which ultimately means that it can be used as a savings vehicle. The advantage here is once you build up enough of a cash value, you have the option to borrow against that value or cash in your policy for that value. However at the same time, the disadvantage to having this particular benefit is paying a higher insurance rate in comparison to other types of life insurance policies.

A universal life insurance policy works somewhat differently than the ones mentioned above, yet still incorporates some similar characteristics to both term and permanent life insurance policies. Instead of paying a flat life insurance premium, you actually get to choose how much money to invest into the policy. Universal life insurance policies also offer cash value that can often be tax-deferred, meaning that you don’t have to pay taxes for the cash that your policy accumulates.

Being prepared for the consequences that can result from the tragic event of your own premature death is not exactly an easy feat to accomplish, however it is important. This is especially true if you want the satisfaction of knowing that the loved ones you may leave behind will be financially protected. Additionally, purchasing a life insurance policy can also be used as a savings vehicle, which can always come in handy for other financial emergency situations that can arise. Although premiums vary according to each company and policy, obtaining multiple insurance quotes from several different companies is a good way to lock in a competitive life insurance rate on your policy.

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