Posted by Tom Carolan on Fri, Nov 13, 2009 @ 05:18 PM
There are a wide range of life insurance products that are floating in the market. Choosing the right life insurance policy involves assessing your particular situation and evaluating the right policy for you. It is imperative to choose the right life insurance that fits your bill or which can be customized to suit your particular needs.
Unlike whole life insurance, term life insurance is purchased to cover a limited term period. Term life pays the insured sum only when the insured dies within the time span of the policy. Term life policies do not accrue any cash value. So if you live past the length of the policy, you won't receive any money. It is also important to understand that premiums for term life policies may not be fixed, and may increase from time to time. To avoid this, be sure to look for a guaranteed level premium term life insurance policy. These policies guarantee a level premium throughout the term period.
Advantages of a Term Life Insurance
Term life insurance covers the maximum insurance for your money. It can be beneficial for those families that have more financial obligations than current assets. Here are some of the advantages of a term insurance:
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Affordable
Term life insurance offers the most affordable premiums against high death benefits.
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Simple
Term life insurance is the most simple life insurance product available in the market.
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Competitive Pricing
Since term life policies are simple in nature, they can be easily compared on the basis of price and features. This makes term life insurance an appealing commodity in a very competitive market.
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Flexibility
Term Life policies may include "renewability" and "convertability" options. The renewability feature enables you to renew your term policy at the end of the term, without having to undergo a medical exam. A convertible feature allows you to convert your term life policy into an equivalent whole life policy, which accrues cash value, should you feel the need to switch to a permanent policy.
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Waiver of premium
There is an additional optional feature called "waiver of premium", which means that in the event of your inability to pay premiums due to circumstances stipulated in the term life insurance contract, the insurance company will waive payments for a stipulated time. However, this feature comes with an extra charge.
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Short Term Coverage to Suit Your Needs
Term life is suitable for short term coverage. If your mortgage can be paid up in ten years you may want to choose a term policy for ten years. Most people do not envisage requiring life insurance in their senior years, so a term life policy makes sense for short term financial planning.
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Deciding If a Term Life Insurance Policy is Right for You
Deciding the right life insurance policy is a very important step in securing your family's future. If you are looking for a low cost, budget friendly life insurance plan, choosing a term life insurance policy would be your best option. Moreover, term life insurance is a good choice for people on fixed incomes and with a growing family. If you have a mortgage, educational loans, estate taxes or other liabilities, your sudden death would place an overwhelming financial burden on your family. Term life insurance provides high death benefits at the most affordable rates. This is why term life policies are the most popular life insurance policy. You should determine the amount of life insurance coverage that enables your family to clear all debts and provide a tidy some for their future. You may want to include college funds for your children in your coverage.
Here is a quick check-list that can help you to decide if a low cost term life insurance policy is right for you:
- If you're on a budget and cannot afford a very high premium.
- If you are young, and in good health. You can take advantage of low premium rates.
- If you are looking for a simple, straight-forward, low cost life insurance plan to protect your beneficiaries.
Most people need life insurance and term life is suitable for all stages of life. Term life policies offer a cheap option to suit your needs. Term life is also easy to purchase. Many online life insurance providers have access to hundreds of reliable life insurance companies. By feeding in your personal information, you can receive numerous quotes for comparison within minutes. Remember to be completely honest in answering questionnaires. Use sites that are absolutely safe and are certified by the Better Business Bureau to safeguard your interests. Many online sites, provide cheap initial quotes to attract customers. They may end up being a disappointment.
Many people think they may not be eligible for a term life policy or they will have to pay high premiums because they suffer from certain health conditions. But there are online life insurance providers who can help you find life insurance companies that may look more favorably on certain medical conditions than the regular life insurance companies.
Conclusion
Choosing the right life insurance that suits your needs is simple once you've studied
your options thoroughly. Utilize the Internet's resources to educate yourself about life insurance basics. Factor in your personal situation, present debts and future liabilities and you will be able to gauge how much life coverage your family would need. Many online insurance quote providers can help you with your queries and offer professional advice on choosing the right policy for your particular situation. And once you factored in all the scenarios, and have numerous term life policies to evaluate, choosing a life insurance not only becomes easy, but beneficial too.
More insurance resources
Posted by Tom Carolan on Fri, Nov 13, 2009 @ 11:54 AM
There has never been a better time to obtain the financial security a life insurance policy can provide.
Life insurance pays a specified amount of money to designated beneficiaries upon the death of the person insured. With Americans living longer-according to the Centers for Disease Control, the average life expectancy for men and women in 2000 was 74 and 79 years respectively, compared with 70 and 77 years in 1980-many insurance companies are reducing rates on life insurance, up to 35 percent in some instances, allowing policyholders to potentially save hundreds of dollars each year.
Now is an opportune time to purchase life insurance with today's lower rates and the ease of comparing prices online. Life insurance helps simplify difficult financial decisions for loved ones, during the grieving process and years down the road.
To help families with life insurance planning, www.InsuranceBestPrices.com offers answers to some of the most common life insurance questions:
Who Needs It?
Primary caregivers or those with dependents typically need life insurance to help cover their expenses after death, including funeral costs and outstanding debt, and to provide financial support for loved ones' expenses in the future, such as house payments or college tuition.
How Much Should You Buy?
In general, you should have coverage equal to seven to 10 times your annual income, depending on your income level and stage in life. Ideally, you should have enough coverage so your beneficiaries could invest the death benefit after paying final expenses, and maintain their lifestyle in the near term by spending the interest only.
What Type Do You Need?
There are two basic types of life insurance coverage-term and permanent. It's important to understand and consider the benefits and drawbacks of each type of life insurance:
- Term insurance offers coverage for a specified timeframe, such as 30 years, and provides a cash death benefit only. With this type of insurance, beneficiaries will receive the death benefit only if the person insured dies during the specified timeframe. Because it is "no frills" insurance, term insurance is typically the more affordable option for young families on a budget.
- Permanent insurance, while more expensive, provides options for the future.
This type of coverage offers lifetime protection and combines a death benefit with a tax-deferred savings component called "cash value." The cash value is paid if coverage is cancelled, and it may be possible to borrow or withdraw a portion of the cash value while keeping the life insurance in effect. The availability of fixed premiums and tax benefits can make permanent life insurance the more affordable choice in the long run.
How Should You Choose?
Compare companies before making any purchasing decisions. Research the same type of policy with each provider, so you can accurately compare policy performance and other benefits.
It also is a good idea to ask the company you're considering if it will provide any additional services beyond the life insurance contract. For example, some companies offer survivors free financial plans and special assistance to help with financial decisions.
In addition, review insurance companies' financial strength ratings given by independent organizations, such as Moody's Investors Services. This will help ensure you choose a policy from a financially sound company.
By following this plan, you should be well prepared to purchase the right life insurance policy to meet your needs.
Posted by Tom Carolan on Fri, Nov 13, 2009 @ 11:37 AM
Life insurance has long been considered a vital building block of financial security because it protects those most important to you in the event of a death. Although it comes in many forms, it has one core benefit: it pays an income-tax-free death benefit directly to your beneficiary when you die.
But that's not all today's life insurance policies offer. You can also use life insurance to reduce taxes today, build tax-advantaged income for retirement or provide assets to offset estate taxes.
Not as complex as it seems
Deciding what type of insurance best fits your needs may be simpler than you think. Some of the factors that will influence your decision are your age, number of dependents and overall financial goals. A basic understanding of your life insurance choices will enable you to narrow your scope.
To help you begin your research, here's information about the two categories of life insurance-term insurance and cash value insurance.
Term insurance provides protection for a specific time period. If you die during that period, a death benefit is paid to the policy's beneficiary. Generally less expensive than cash value insurance, term insurance can be likened to renting a property. You pay for it during the policy's "term" (for example, one, five, 10 or 15 years) and when the term expires, your coverage expires-without building equity (cash value).
Term insurance is generally purchased to cover specific needs; children until they are adults, a mortgage until its paid off, or other short-term obligations.
Cashing in on cash value
Unlike term insurance, cash value insurance can provide protection for your lifetime and-similar to owning property-it enables you to build up cash value. This is money that you can access for emergencies and other needs, such as college tuition or supplemental retirement income in later years. And like term insurance, cash value insurance also pays an income-tax-free death benefit at the time of your death.
The most common types of cash value insurance that people purchase are:
- Variable universal life-Typically designed for people who have longer investment time horizons, this insurance offers flexibility and control. When building cash values, you get to choose which of the variable investment options you want to invest in. Because variable investment options are similar in nature to mutual funds and fluctuate in value with the market, this type of insurance is better suited to couples with a higher risk tolerance.
- Variable second-to-die-Typically used for estate planning purposes, such as passing a family business, or other significant assets from one generation to the next, this insurance insures two lives and pays a death benefit at the death of the second insured. The fact that one policy covers two lives provides some premium savings over two separate policies.
- Whole life-Generally viewed as less flexible but secure, this insurance offers a guaranteed death benefit and guaranteed cash values.
- Universal life-This type of insurance offers the flexibility of variable universal life, but with a secure fixed rate of return for consumers who prefer less risk.