Certain decisions in life can be very confusing and seem complicated. One such decision is arriving at the right type of life insurance policy. However, this decision need not be as complicated as it is normally perceived to be. By understanding life insurance using resources on hand can prove to be very useful.
Insuriffic can provide you with all the help you need to understand the various types of life insurance policies along with their advantages and drawbacks. We will give you an understanding of what they are and how they work in addition to the varying rates of these policies.
Is life insurance needed for you?
This question can be answered depending on your needs. While life insurance will prove to be very helpful if you have a family, it might not be necessary if you don’t have any dependents. Some people may also not feel the need for life insurance if they have a family but are not the main bread winners in the house. You will need to consider the money that will be required by your dependents to meet the daily needs in case of your death. If you are the main source of earning for the family, then, in case of your death, life insurance plays the crucial role of meeting the financial needs of your family.
Determining the amount of life insurance
Depending how much life insurance coverage you will need depends on a large number of factors. The number of dependents, sources of income, your lifestyle and debt are the crucial factors that help in determining the amount of coverage needed. Most people prefer coverage in the range of five to ten times the salary of the individual.
Types of Policies I can choose from
Term Life Policy
There will be no end to the debate on whole life versus term life insurance policy. According to some experts in this field, if your family does not have a history of hereditary diseases and you are younger than 40, then, going in for term life policy will be a wise decision as this does not offer cash value but good benefits on death of the policy holder.
Whole Life Policy
This is one of the traditional life insurance policies where the policy premium does not vary through the entire tenure of your policy. This policy stays in effect even after you have paid all your premiums until your death. During this span there is a significant cash reserve that gets accumulated over which you will have no control.
This type of policy will prove to be costly since it offers cash value and death benefits. A certain amount of money paid as premiums for this policy will earn interest since it will be set aside for savings program and might be directed towards other investments. Overall, this policy that has been around for about quarter of a century is much more beneficial than the term life policy.
Variable Life Policy
This is the most expensive of all types of policies available because it generates a lot of cash reserve, the control of which will be with the policy holder who can the investment options from the list provided by the insurance provider. These investments you choose decide the value of your cash reserve. Since these investments depend greatly on the stock market conditions, they will grow fast if the conditions are good and lose more if the conditions are poor.
Universal Life Policy
This is a policy that is a blend of whole life and term life policies. The premiums to be paid for the universal life policies can be varied by using the cash reserve to pay off a part of your premiums. The amount to be availed as death benefit can also be varied. This comes at a price since the policy holder has to pay high administrative charges. The premiums for these policies are higher than those for term insurance and lower than the premium for whole life insurance.
Cost approximation
If a healthy man, aged 30 years, opts for term life insurance policy for $300,000, he will have to pay $300 a year approximately as premium costs. A cash value policy for the same type of coverage will cost in excess of $3000.
Summary
It is best to know all about life insurance policies, irrespective of if you are buying a new one or opting for renewal of the existing policy. This information will help you make the right choice depending on the needs of your family, your expectations and the costs involved.
Obtain free whole life insurance quotes online and learn the simple steps to buy this insurance online with ease.