Thursday, March 12, 2020

Understanding The Different Types Of Life Insurance

There are may companies providing life insurance services; you can get most of the information you need from insurance brokers, financial advisers who work for insurance companies, employees of insurance companies, and other sources. Much of the information you receive, however, will be in general terms or will focus more on sales talk aimed at getting you to purchase life insurance from the person you are talking to.

The truth is that there are many different types of life insurance available not just the cradle to grave coverage offered by insurance sales people. Here are three of them.

Level Term Life Insurance

This is a type of coverage with a specific face amount (the death benefit) over a set number of years with the premium generally kept constant throughout the policy's term. The term of insurance is fixed; it can be 1, 5, 10, 15, 20, and even 30 years.

The typical aim of this kind of insurance is providing the family some financial protection in case of the insured's death within the term ensuring that there are enough monies to support the survivor and any dependent children. It may also be designed to cover payments for loans or mortgages, again ensuring that the beneficiary will not be burdened by the responsibility of repaying them when the insured passes away.

This is how it works. You purchase the insurance plan. This insurance will cover you effectively for the term or the number of years specified in your insurance contract. Within that term, too, you will have to pay insurance premiums regularly. If you die within that specific time period, your family or whoever your beneficiary is will receive the amount of money specified in the plan. If you don't die within the term, you lose your premiums, unless your policy states that you get them back.

Decreasing Term Life Insurance

This is taken out specifically to provide a contingency for repaying the policyholder's loans and mortgages just in case he passes away before he's able to repay them. The insurance coverage is for a specific period (usually equivalent to the life of the mortgage or loan), and the level of coverage decreases during the policy's term usually in conjunction with the amount of the loan or the mortgage (e.g., as the loan is repaid, the amount of cover is reduced to cover the balance remaining). The premium remains constant during the term of the policy.

Decreasing term insurance works pretty much the same way as level term insurance in term length and what triggers the payout. The only difference is the decreasing value of the coverage.

Whole Life Insurance

If you take out this type of insurance, your family or beneficiary will get a lump sum of money. This money can then be used to pay for your children's educations or mere day to day expenses.

Of all three types, this is the most expensive in terms of premiums. However, this type of insurance lets you build cash value which you can loan out. You can also surrender the insurance in exchange for the total cash value of the policy. This type of insurance is therefore more flexible since it offers you more options. Moreover, you have coverage as long as you live, provided of course that you keep up your premium payments.

The above are only three of the available life insurance options available. It would be best to sit down with an authorized insurance person for advice on the best type of insurance for your particular needs.

Wednesday, March 4, 2020

Why Is Life Insurance Important?

There are many things in life that the average household can live without, but life insurance should not be one of those things. The importance of life insurance increases as the number of people in a household increases. A single person with few, if any, close relations can get by on a very little life insurance or perhaps no insurance at all. The same cannot be said for persons who have family members or other types of responsibilities.

Life insurance is a way to protect your family against possible financial trouble or even ruin, depending on your circumstances. Life insurance is also a way to relieve some of the anxiety that family members may feel as they wonder how they will get by should a breadwinner in the family pass on. Some forms of life insurance can even be used as a means of saving money over the long term.

It is important for consumers to understand that the term "life insurance" is a very broad term. There are various types of policies, and often one will be a far better option for a particular family or person than another might be for that same family or person. Because there are so many types of policies available, the consumer would do well to get a basic understanding of each before committing to one over another. The best way, of course, to do this is through a reputable life insurance broker or company agent.

A reputable life insurance broker will normally be a state-licensed agent who carries different types of policies from different companies. There are life insurance agents, as well, who normally work for a particular insurance company and sell the products of that company. The main difference between working with a broker and working with a company agent is selection. A broker can offer many different types of policies at different price points because he or she carries more options from more sources. A company agent can only offer what his or her company has to offer. This can limit your choices.

Aside from choosing the correct type of policy, consumers must also decide on the level of coverage they need. A common mistake that many consumers make is when they, more or less, pick a number out of the blue. A consumer might say: "I need $10,000 worth of life insurance" but when asked to justify that amount they are at a loss to do so. Is that amount too much; is it too little? Often they simply do not know.

The amount of coverage needed will vary from one family to another. It can also vary depending on where in life a person is when he or she takes out the policy. A newly married couple, young in age, will normally need less life insurance coverage than a middle-aged couple with a home mortgage and student loans that need to be paid off. Then again, a high earning young couple may need more life insurance than a middle-aged couple if the high-earning couple needs to replace one of the incomes lost through death. As you can see, coverage is dependent on many issues and aspects, some of which are hard to explore without the aid of a qualified life insurance agent or broker.

Invest the time and effort needed to speak with a reputable broker or agent, examine your options, choose your coverage wisely, and your family will be protected if the unforeseen should happen.