Life Insurance
Importance of life insurance
Life insurance is intended to protect your family from
financial hardship in the event of your death. It is not
uncommon for people to dismiss this thought, and not carry
any type of life insurance. The question you should ask
yourself is, "is it fair to your family to leave
them without any security?"
An untimely death can leave your family in debt with
no way to meet their financial needs. It is, therefore,
recommended that you plan for their protection.
Types of life insurance
Term life and permanent life insurance, are the two
basic kinds of life insurance. Both types, have advantages
and disadvantages.
Term Life
Term life insurance, is one method of life insurance
available. This insurance is issued in terms. An individual
is only covered if their death occurs during the term
of coverage. Each term can be from 1-30 years long, and
generally can be renewed.
Pros
Term life insurance policies usually have low initial
premiums. Because the premiums are low an individual
can usually get higher death benefits.
Cons
Term life insurance premiums increase as you get older.
An individual's renewal can be denied if they become
too old, or if they no longer meet specific health criteria.
Another disadvantage of term life insurance, is that
it has no cash value. Unlike Permanent insurance, you
can not borrow against it or surrender it for cash.
(For more information on cash value, read the section
on permanent insurance).
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Permanent Insurance
Permanent life insurance comes in many forms.
Ordinary/Whole Life
Whole life insurance is the most commonly used life insurance
policy available. It generally has consistent premiums
that are paid throughout the life of the policy.
Variable Life
This type of policy is based on a portfolio of an investment.
Its death benefits can fluctuate depending on the performance
of the investment. Variable life insurance carries a high
risk, and should be carefully thought through.
Universal Life
This type of life insurance has a very flexible premium
payment structure. The insured individual can usually
pay their premiums at any time. The payment amount is
also flexible, within a pre-determined range. The death
benefits of the universal life coverage, can be increased,
or decreased with ease. Keep in mind that an individual's
health condition can affect the flexibility of the death
benefits.
Adjustable Life
Adjustable life policies are considered adjustable, because
the premiums are adjusted to match current interest rates.
The readjustment periods are usually 5 or 10 years long.
Pros
The advantages of a permanent life insurance, out weigh
the disadvantages. An individual's coverage is guaranteed
for life as long as all premiums are paid. The insurance
policy has a cash value that increases. The policy can
be surrendered for some or all of its cash value and
it can be borrowed against.
Cons
The biggest con with permanent life insurance, is its
premiums. The premiums are significantly higher than
term life. Because of the premiums, you might not be
able to get death benefits that are as large as a term
life policy.
Now that you know a bit more about life insurance, try
getting a free quote to see how much it would cost you
to be prepared for the worst. There are services available
that allow you to get quotes from local, and national
life insurance companies without having to make a commitment.
Read our review on Lowering your
Life Insurance
Get
FREE Insurance Quotes from NetQuote
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