Figuring out life insurance can be confusing. There are many different life insurance policies available, but many people simply choose what an insurance sales person pushes them to buy. It is important to choose the right life insurance; the whole purpose of life insurance is to provide a safety net for loved ones when you die. By familiarizing yourself with the basic kinds of life insurance, you gain the knowledge that you need to make your own decision without sales pressure. There are two main kinds of life insurance: term and whole.
Term life is one of the most popular types of life insurance for people on a budget. Term life has a low premium that is affordable to people with little money to spare. Initially, premiums are extremely low, but as the policy ages the premium will increase. In order to get the lowest rates, term life should be purchased at the youngest age allowed by the insurance company.
This type of insurance has a specific period of coverage. Typically, people purchase term life insurance under a fifteen year term. You can also choose up to thirty years. Out of all the factors that can influence the policy details, your current age is a big one.
Term life insurance only pays a death benefit that equals the face value of the policy. It does not build or increase in value; a twenty thousand dollar policy only pays that exact amount upon your death. If you outlive the term of your policy, you will need to buy a new policy.
Whole life, also called permanent life, is different from term life. Whole life insurance serves the same purpose: providing financial help to your family when you die. Whole life has a higher premium. The premium amounts vary depending on your age but also the amount of coverage you choose.
Whole life does not have an expiration like term life does. Once you purchase whole life it remains in effect for as long as you live. The policy doesn’t end as long as you continue paying the premiums. If you bought one of these policies at age 30 and died at age 75, it would be active through all those years.
Second, whole life insurance accrues an extra value. As you pay your monthly payments, eventually the total amount you wind up paying with surpass how much the policy’s worth. When this happens, the extra money is put into another account, similar to a savings account. Should you ever need it, you can use the money for an emergency. If it is allowed to build, this money is included with the policy death benefits.
Within these two main types of life insurance, there are many subcategories. Once you’ve decided whether you want term or whole life, discuss with your family and an insurance representative exactly which subcategory will work best for you. Life insurance policies should be chosen to fit the needs of you and your family.
The Internet certainly makes all sorts of process is very simple, and the same is certainly true of gathering quotes. It will produce a fair contract that will ensure all parties are satisfied. These types are far and few between but there are some out there. Life Insurance Policies