insurance guide

Life insurance is a tool that may help provide financial security for your loved ones in the event something should happen to you. you are probably familiar with the terms “term life” and “whole life,” but may not necessarily understand the differences between these two types of insurance.

Also called temporary insurance, term life insurance covers a person against death for a limited time. as an example, the term may cover the person until children reach the age of 18, until college tuition is paid for, or until retirement. this is the ideal coverage for those whose insurance needs may decrease over time.

With a renewal provision, term life policies can be renewed at the end of the term without providing additional proof of good health. Although initially affordable, the premiums may increase with each renewal.

At the end of the term, you pay for the policy period or the policy expires. this is similar to auto insurance in that you don’t receive any benefits unless a claim is made against the policy during the term.

Also called permanent insurance, whole life insurance is permanent and does not expire as long as you continue to pay the premiums. the premiums do not increase – they are locked in for life the day you sign the contract. the coverage is similar to term life, but whole life acts as an investment vehicle as well with a portion of the premium going towards it and the rest going into an investment account. the investment account can be an interest bearing account or a variable investment account (like stocks or bonds).

Term life insurance is generally better for young families with large financial obligations since this policy offers substantially lower premiums and provides sufficient coverage to protect against loss of income. Whole life insurance is generally purchased by people for tax and estate planning purposes. Consider consulting a financial advisor for advice in selecting the best policy for your family.

Ultimately, the type of life insurance you choose depends on the amount of insurance you need, your budget and your estimated length of commitment.

If you are account this, you are probably committed to making sure that the loved ones you’ll leave behind when you die are provided for. not if you die, but when you die. It might not happen for a long time yet, or you could meet your end in an hour or two. It does not matter. One of the options you have is whole life insurance.

There are a lot of different policies out there. I am only going to look at the basic product and give you the most relevant benefits of whole life insurance. Before we get to that, lets quickly look at what whole life insurance is.

In its basic form it is a policy that pays a lump sum to the beneficiary when the insured person dies, provided that all premiums are paid and up to date.

As I have mentioned earlier, there are a lot of different products out there, each with specific differences. however, the basic benefits of whole life insurance over the spectrum remains essentially the same.

1. the main positive points are that it has a fixed premium over the whole period that the policy runs. you do not have to worry about inflation and other market fluctuations that could influence the premium. for the short term the premiums might appear to be a bit steep, but over the whole course of the policy this is canceled out.

2. Furthermore, and probably one of its best attributes, is that it can be used as an investment since it builds up a cash value as time goes by. this enables you to borrow money from it in times of need. Unlike loans from banks the interest is very low and you do not get penalized for not making payments. It is, however, wise to pay back what you borrow so you that the policy does not depreciate.

3. If you decide for whatever reason to stop paying or surrender the policy, you can get back the cash value that the policy has accumulated.

4. the cash value is also tax deferrable.
All said and done, the benefits of whole life insurance makes it an excellent policy to get at a relatively young age so that the premiums are spread out over a long period of time. the predictability of this kind of policy assures peace of mind.