For some, life insurance means security, knowing that their family or business is safe should they unexpectedly pass away. On the other hand, some fear pushy salespeople and feel unable to understand the product.
Learning about the affordable life insurance options available to you can prevent stress and dissatisfaction.
Three main types of policies exist. Here is a brief explanation of what they mean:
Whole Life
Whole life insurance is one of the types of permanent insurance. As long as premium payments are paid, the policy stays in effect for a lifetime.
The cost of whole life insurance premiums will usually be more than the cost of an equivalent amount of term insurance because the cost is averaged. While the cost of term insurance goes up with each renewal, whole life insurance never needs renewing. There is no change in whole-life policy premium, no matter how great an age the policyholder is fortunate to reach!
Some policies allow the holder to borrow against a savings option, though this is not always available.
Universal Life
Universal life insurance is also permanent. Until you pass away, the policy can remain in effect. You never need to renew the policy (regardless of health) and the premiums will never go up.
Other financial services are integrated into universal life policies, such as a savings plan. If desired, the policy can be ended and the savings accrued returned to the policyholder. If desired, policy owners can opt to add more people to the policy, manage their own investments, or even use accumulated savings to pay premiums.
Universal life insurance is the most expensive option because of the amount of flexibility and options.
Term
Term insurance is less expensive than either of the other two types. For term insurance, a period of time is selected, say 1, 5, 10, or even 20 years.
For a young family with dependents and lots of debt that will be paid by the end of the policy term, term insurance is a good choice. There's no cash value to a term policy, so it cannot be borrowed against or exchanged for cash. If the policy ends and the individual wants to renew the policy the cost of premiums will be higher.
Using term insurance to cover the basic financial requirements of an individual while also instituting a separate savings plan may reduce the need for insurance later in life and will give you a much more affordable life insurance. This must be balanced with the long-term protection which is sacrificed.
Policy Riders
If needed, one can purchase other options with some insurance policies.
These additional options that may be available are called 'riders'. Some riders allow loans or cash payouts; others include AD&D (Accidental Death and Dismemberment), A&S (Accident and Sickness), insurance for disability income, and the addition of a spouse.
The best way to get an affordable life insurance is to find an insurance broker; they can help you grasp the benefits of different features and make recommendations that will meet your personal needs. A grasp of all these matters will help you thriftily provide for your family or business by making a wise life insurance decision.
Ed Brancheau, affordable life insurance quote.
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