Insurance: Choosing Term, Whole, or Others

There are so many ways to have your life insured and your decision can't be driven completely by cost. Following will be your education on the different kinds and types of ways to insure your family's security if you die prematurely; use this guide to make an informed decision that will work for your happiness. Term Insurance If you need to be insured for a specific number of years because you are working a risky job or for any other reason fear you are living with an increased chance of death, this is the category for you. In exchange for a monthly (or annual) premium, those you leave behind would receive an agreed upon payment of money to secure their futures without you. Going into your decision, you'll need to have a term in mind. It might be 5 years, 10 years, or whatever length you can negotiate with the agent. You're going to have to pay a high premium over a short period of time, but less for longer. You'll also have to determine the "face amount". This is the payout your family would receive in the unfortunate event of your death. Almost all insurance company will put terms, premiums, and face amounts in all sorts of different combinations, so it can be difficult to find a match for you, but don't settle for what you don't need. There are three subtypes: Level: Purchased in periods of 5 years at a fixed premium, it is great for financial planning. Annual Renewable: With this, you are only covered for a year, but the price you received is guaranteed for renewal for the following years. Mortgage: Your relatives would receive the amount of your home mortgage upon your death, and you pay a level premium. Whole Life You get a level premium and guaranteed money. The premiums, death benefits, and cash values are all guaranteed with no tricky fees. Unfortunately, you won't get as competitive a face value or premium here. However, over the course of a life, the amount you pay would become level with term insurance on the whole. You should also check into the company's dividends policy. Universal Life These are insurance packages that, as long as you make your premium payments, the insurer cannot cancel except for fraud, and are more flexible about the term, interest rate of return, and premium. Over time, the payout becomes less, and the policy essentially deteriorates with interest payments. One nice thing though is that if you reach a set age, say 100 years old, you receive the death benefit. If you want flexibility now, this is a good option, but ultimately it isn't worth as much. Limited Pay You pay all the premiums in the early years of the policy, and you retain the benefit of the policy until a set age. Usually it is around retirement. Life insurance is a tricky topic, but with proper research you can find the life insurance policy that is right for you. Check online for life insurance quotes to make sure you get a good deal, but don't get the wrong type of coverage - it will waste more money than you save.