Life Insurance – Do You Need It
There are essentially two kinds of life insurance. Or, as some call it, “death insurance” or “funeral payments”. In any case, both have the same purpose.” to give your family some money to replace what they are losing with your death.
The first, and most common, is term life insurance. The name was derived from the fact that the policy and your coverage are good for a special term, which is the length of the policy. The terms run between ten and 30 years and usually are chosen in five year increments.
Term costs less because the carrier is assessing their risk as to whether or not you will pass away during the coverage years. For your family to see any money, you need to die during the tenure of the coverage.
They “bet” according to your risk factor and from this they then determine the likelihood of your death or survival. Over 50, heart attacks, cancer survivor, or even high cholesterol will put you into high risk categories and increase your premium.
Universal life is another kind of insurance. Also called cash value, it costs more to be covered for less. Unlike a term policy, cash value will cover you for your entire life, but of course you are paying premiums forever, too.
Whole life also has a savings portion of the policy. The company usually guarantees you a return on your investment, but the company actually keeps most of it; you really only see about 3-4%. Read the first few pages of your policy, that is where it discusses your investment return.
Also when you are reading the fine print, you should look for the section that talks about exactly what funds will be paid out upon your death. Your family doesn’t get the cash value and the death benefit! They get the death benefit – the face value of the policy. The company keeps your cash value.
Last but not least, if your insurance agent tells you that your policy will pay for itself after so many years, ask how this is done. Agents want their customers to believe that after about 20 years no more premiums are due. This isn’t true at all. Premiums are due, but they are taken out of your cash value portion, reducing it significantly. If you ever need a loan, you’ll be in trouble.
When your trying to get Life Insurance quotes picking the best place first can seem daunting. But to get the best costs on Life Insurance, you need to look around and compare. Go online to get the best costs now!
