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Affordable Life Insurance Selecting the Right One
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What should the words, "affordable life insurance" mean to you?
Life insurance means to some that they don't have to worry about their family and business should they pass away. To other people, images arise of tricky explanations and intimidating hard-sell tactics.
Learning about the affordable life insurance options available to you can prevent stress and dissatisfaction.
Three main types of policies exist. Following is a summary of their differences and similarities:
Whole Life
A permanent option is whole life insurance. The policy will continue in force as long as your premium (payments) is kept current.
The payments on a term life policy will be lower than those for a whole life one, because the latter's costs are averaged across the entire life of the policyholder. There are, however, no increases with renewal, because whole life policies never need to be renewed! While term-life policies increase in cost with the age of the policyholder, whole-life ones do not.
In some policies a savings option can be added which can be used to borrow against.
Universal Life
Universal life insurance is also permanent. Until you pass away, the policy can remain in effect. Health notwithstanding, the policy needs no renewal and has no premium increases.
Other financial services are integrated into universal life policies, such as a savings plan. The policy can otherwise be surrendered, the savings that have been accrued being given in exchange. There are other options: addition of other persons, self-managed investments, or arranging to pay premiums using accrued savings.
Universal life insurance is the most expensive option because of the amount of flexibility and options.
Term
The least expensive life insurance policy option is term insurance. You can select a period of time (a term) for term insurance; e.g. 1, 5, 10, or 20 years.
If you have young dependents and high debts, but expect these responsibilities to end by the end of a 15-20 year term, term insurance might be for you. A term policy can't be borrowed against or cashed in, because it doesn't carry a cash value. If, after a term ends, the holder wishes to renew the policy, the cost of premiums is likely to rise.
Using term insurance to cover the basic financial requirements of an individual while also instituting a separate savings plan may reduce the need for insurance later in life and will give you a much more affordable life insurance. This must be balanced with the long-term protection which is sacrificed.
Policy Riders
Depending on the needs of an individual there are other options that can be purchased with certain insurance policies.
Sometimes, these additions are called 'riders'. They can include adding insurance for income in case of disability, Accident and Sickness (or A&S), Accidental Death and Dismemberment (or AD&D), and the addition of a spouse; other customizations include the option to take a loan or a cash payout, if the policy allows.
To receive the most affordable life insurance, Talk to an insurance broker who will explain the benefits of each feature and recommends only what best suits your needs. With the understanding you'll gain, you'll be able to choose wisely, conserving your hard-earned cash and ensuring that your family or business is properly secured.
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Ed Brancheau, better known as The Insurance Egghead, assists individuals, families and businesses find the affordable life insurance quote they need. Learn more about health, dental, vision, accident and life insurance at his website, The Insurance Egghead.
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