Whole Life Insurance & Term Life Insurance-Which Should You Choose?

March 11, 2009 by  
Filed under Life Insurance

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Before you venture out shopping for life insurance, you must be aware of the two fundamental types: Whole life insurance and Term life insurance. What is whole life insurance? Whole life insurance is a policy that lasts for the duration of your life, meaning that your dependents are assured to be given a stipulated amount at whatever time of your death.

What is Term life insurance? Term life insurance is usually purchased identically as a mortgage, and generally includes the same 25-year period. It is a simple assurance with no aspect of investment that protects your beneficiaries through payment of a lump sum in case of your death within a specific time period as agreed upon in the life insurance policy.

After knowing the basic knowledge of these types, you will now make a decision and choose what type of life insurance suits you best – term life insurance or whole life insurance.

Here are some tips regarding Term life insurance that you need to know to make your decision easier: a.) Know your Premium budget. If your premium budget is small, term life insurance is better since the life insurance rates covered are lower. b) If you need a larger amount of cover, say, you have beneficiaries, then taking advantage of the lower premium levels will be better for you. c) Premium terms, life insurance quotes are lower if you are young. You might be able to arrange a term life insurance for the whole time you’ll need life insurance especially when you have dependent children or beneficiaries. d) Term life insurance does not need an investment, so if you invest in the stock market or invest in other type of savings, you won’t need for a life insurance policy having an investment component.

Next, here are some tips regarding whole life insurance that might be useful for you: a) If you think or feel that you will need cover for more than a specified period of time, then whole life insurance is the better choice since you will be assured of payment during the whole of your lifetime. This also prevents you from being unable to get insurance due to a fact that it happened over the time duration of the policy. b) If you want to have both your insurance and a certain amount of your investment within the same policy, then whole life insurance suits this option best.

At the time when the life insurance policy has accumulated up an investment amount over in later years, you will be able to borrow against its value thus you will have the advantage of benefitting from the policy without having to die. At a general note, you should also take note if you have a mortgage on your home, if you have one then it is advisable to make use or arrange of a “decreasing term” life insurance policy to at least pay the mortgage at the event of your death.

The type of life insurance you choose is dependent on your own personal circumstances and priorities. It depends mostly on your premium budgets to determine the monthly life insurance rates, thus you will have to consider the amount of life insurance that you could buy to provide your family or beneficiaries with an income that is more or less equivalent to your earnings. So take your time and think about what you need before venturing out to shop for the right type of life insurance for you and your family.

Life Insurance-Understanding Life Insurance Risks

March 10, 2009 by  
Filed under Life Insurance

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Indeed life insurance helps you with critical moments of your life and it is indeed reliable and useful in its ways. However, if you are not aware of its risks, you will find yourself ending up in a pile of debt and a truckload of problems. This article will help you understand the possible risks in order for you to take the right choices and give you a peace of mind.

The most troublesome part of having life insurance is cost. There are many life insurance policies that only support funeral expenses with the catering services and the likes. And most benefits do not offer you more than $15,000 to $20,000. Some of these life insurance policies are very expensive and are based only from the gender and age of the insured.

If you are not careful with this, and if you don’t read the life insurance quotes, exemptions, terms and conditions, you will be one of those individuals who are paying the life insurance company more than the premium life insurance rates you have applied for. At times, these rates cost more than the death benefit of the plan. So understanding the entire coverage of the plan is a must. Skipping the fine print within the contract will not help you either.
In some guaranteed life insurance policies, there is what is called graded benefits, wherein the insurance company protects itself from individuals, those with a short time to live, who wants to apply for life insurance. Some policies may indicate that if the person dies within the time duration the policy provided, the insurance company will only be paying for the premiums and the interests accrued to the applicant, other than that, there will be no further financial support given.

Getting a physical and medical check-up before obtaining life insurance is traditional. This determines whether you are eligible for the life insurance or not. If you are eligible, then you may have the advantage of paying less and getting more benefits as compared to getting a guaranteed life insurance policy. However, guaranteed life insurance is a better option if you find it hard to apply for other policies due to your health condition or your current age. It is always advisable to have a financial advisor to help you in terms of other possible options.

An insurance company may actually refuse to cover for individuals having unhealthy conditions, in some cases like diabetes, cancer, obesity, and other diseases. It is their prerogative to do so. Thus, it is always recommended to read through all the exemptions and life insurance policies before you decide to opt for a policy. In some cases where they do accept these conditions, you will find yourself being charged more.

A younger applicant for term life insurance gets to have the advantage of paying less than middle-aged individuals. Renewable term life insurance cost may be higher than a standard life insurance policy, however the individual may not have to go for another physical exam for the renewal. But some insurance companies may require new medical records at the time of each renewal.
Whole life insurance is advantageous to young adults, getting a more reliable security, rather than in term life insurance. Why? Whole life insurance will guarantee the person during his whole lifetime – so there is no expiration date. Once the premium budgets are set, regardless of changes in the person’s physical status such as health, weight, age, the stipulated amount is guaranteed at the time of the person’s death. However, whole life insurance will cost more for younger individuals, while term life insurance will cost more for middle age individuals.

Thus with overall knowledge on the risks you have to consider for the types of life insurance, you will be able to at least determine the advantages and disadvantages for you and your family. Getting a life insurance is like having an emergency fund while at the critical time of your life, at the same time reassuring you that your family will be safe at the time when you are gone. Hopefully this article will help you make your decisions before shopping for life insurance.

Low Cost Life Insurance-Tips on How to Budget Your Life Insurance at Low Cost

March 9, 2009 by  
Filed under Featured, Life Insurance

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Like everyone else, of course, we would all like to have low cost life insurance. Though this might be difficult given with lots of choices to choose from, here are some helpful tips that might help you see you through the budget:

a) The purpose of life insurance is to be guaranteed the amount sufficient enough to be able to substitute your current income in case you die before you are able to save up enough financially for your dependents. If you have a family, children or someone depending on you, being the bread winner, then life insurance assures that you can still provide for them even at that time of your death.
If you are middle aged and you have dependants at home, for college tuition, or a mortgage and bills to cover… if so you were to die at an unexpected time, then instead of your family being financially panicked, you can at least be able to provide them with financial aid with your life insurance. Term life insurance is less expensive than a whole life insurance for middle aged individuals. However, if you are single with no dependents, then you probably don’t need life insurance.

b) Life insurance should be a separate matter from investments. When shopping for life insurance, one way to evaluate term life insurance is to determine the cost per $1000 of coverage. To do that, divide the annual premium as offered by the amount of coverage that you need. Let’s say, you need $700,000 for coverage, and the annual life insurance rate premium offers you $3700, so you can calculate it like this per $1000 coverage: ($3700 ÷ $700,000) = $5.28. With this, you can now compare life insurance rates among life insurance companies. Protect your family first before you save up for sufficient assets.

c) Why should you choose term life insurance? There are two types of life insurance you can choose from – the term life insurance and the whole life insurance. To explain, Term life insurance insures you for a certain number of years (example 10, 20 or 30), and pays a death benefit. Whole life insurance may provide you with interests and dividends. Therefore, we can say that term life insurance is less expensive since there are no dividends or interest involved. One tip would be for the bread winner to buy the right amount of term life insurance he needs in order to protect his family during his critical period while allowing to invest on the savings he had to be financially secure later.

d) Another way of getting a low cost life insurance is to keep your physical condition at a point where it is eligible for a less expensive life insurance policy. For example, years ago you have high blood pressure, and you applied for life insurance, and because of that, the life insurance company charges you with a higher life insurance rate due to your physical condition. But after a few years, you took care of your health, and thus your blood pressure decreased. You could opt for a change in your life insurance policy with a lower life insurance rate.

e) To aid you with finding a low cost life insurance, you can ask help from a financial advisor or do the homework yourself by browsing through the Internet. There are over 1000 life insurance companies and their life insurance rates and life insurance quotes vary by hundreds of dollars given the same amount of coverage and benefits. Compare and read through all their terms.

With these tips in mind, you will be able to enjoy a low cost life insurance within your budget needs while protecting your family before something unexpected happens that might endanger the financial stability of your family.