Life Insurance Tips

There are three basic kinds of life insurance, and one of the first decisions to make is which type is best for you and your family. The type of policy that you purchase will determine the price and the benefits that can be enjoyed.

Kinds Of Life Insurance Policies

Term Life: As the name implies, this kind of policy lasts for a "term," or a certain length of time. While some of these policies expire after only six months, it is more common to find policies that will last for 10, 20, or 30 years.

Because it only lasts for a certain length of time and only provides the owner's beneficiaries with protection, this is the cheapest way to purchase coverage.

Whole life: This is the oldest kind of coverage that can be purchased, and it never expires as long as it is paid. In addition to covering the insured person for his entire life, it also can build up a cash value. That means it could be surrendered for the cash value or even borrowed against.

However, this kind of policy will cost considerably more than term for the same dollar amount of coverage. Often, older people purchase a whole policy because they don't want to worry about it expiring or simply cannot qualify for a cheaper one.  So when you are looking at term vs. whole life insurance you need to keep in mind the greater cash value that a whole policy carries and weigh it against the cheaper premiums of the term policy. 

Universal life: This is also permanent, like whole life, but it works a bit differently. It can also grow a cash value, and the cash in the policy is kept separate from the actual coverage. Many people buy these kinds of value to grow that cash account and provide insurance on their lives.

One good thing about universal life insurance is that it is very flexible, and premiums can be adjusted, within certain limits, over the life of the policy. These premium payments may affect the value of the policy and the amount of coverage that it provides.

Which Kind Of Life Insurance Is Better?

Most advisers suggest term for younger people who need to cover their home, spouse, and kids. It is recommended because the price makes it a more affordable option for people who need quite a bit of coverage. Married couples can also choose to purchase joint policies, and the coverage needs of a stay-at-home parent should not be overlooked because it would be expensive to replace all of the services that they provide a family.  While there are affordable whole life insurance policies, they usually don't come with enough death benefit to help a young family justify the premiums costs.

Older people may tend to consider whole life because small policies are fairly easy to qualify. Also, this type will not expire, so these people can be sure they will be able to leave their heirs money.

People who want to combine their policy with a sort of savings plan might consider universal. The cash account can grow over time, and this might make it a handy thing to have while the person is still living.

There isn't one best option for everybody. However, most people agree that they do need some of this important protection.