Knowing Your Life Insurance Options

While there’s not necessarily an age at which you’re too old to get life insurance, some people are not candidates for life insurance, despite what insurance sales representatives would have you think. Many consumers have not been given adequate information about the differences between whole and term life insurance, amongst other differences in the types of insurance policies. We want to make that information clearer, so you can understand and make informed decisions about life insurance. Lots of people don’t know whether life insurance is necessary for them. While many avoid the issue by saying that they will not be able to take money with them when they die, they should consider whether the loved ones they leave behind will need money. It is for the good of your spouse and/or dependents that you should investigate your life insurance options.

There are many varieties of life insurance. Choosing which will depend on your needs. There is term life, whole life, universal/variable universal, no-load, and of course mortgage life. Mortgage life insurance can be great for families with a mortgage. Upon your death, your mortgage is paid and your family can live mortgage free as long as they maintain ownership. It is no wonder with all this confusion most people decide to do nothing. Let us take the mystery out the life insurance options and allow you to make an education choice.

* Term Life Insurance: With this option, you would decide on specific length of time for which the company would cover you, and pay a fixed life insurance premium over that span. In the event of death within that period of time, the insurance company would pay out the amount of money you decided on. However, if your death were to occur outside of that time frame, you will not be covered. Buying a new policy after the expiration of the previous one is always an option, but the rates will tend to be much higher.

-Whole Life Insurance: This type of insurance differs from term life in that it covers you for your entire life, and you still pay a monthly premium. In addition, you can decide to cash in your policy for a lump sum if it no longer needed. Whole life insurance has two values. Its face value is when the policy matures, or in other terms when you die. The cash value is the amount you will receive if you cash it in, or if your policy matures.

• Universal Life Insurance: Universal life insurance invests your premiums in bonds, money market funds, and mortgages. Your investment fund pays for the cost of the death benefit specified at the time the policy was purchased. If the investment fund performs badly, the insurance company must pay a guaranteed minimum amount. A universal life insurance policy is slightly more flexible than other types because the premiums and death benefits can be adjusted according to your present budget requirements. This type of life insurance policy is a good fit for younger couples and families whose circumstances are prone to fluctuation.

• Variable Universal Life Insurance: With variable universal life insurance, the amount of the death benefit is highly dependent on how well your investments perform over the years.

* No-Load (or Low-Load) Life Insurance: This type of policy is beneficial in that companies will sell these to you at a flat rate that isn’t based on commission, so more money goes to the final payoff instead of elsewhere. A financial advisor can be helpful when determining how much life insurance you’ll need in order for your family to live the way they live now if you were gone, which will in turn decide the rate at which you’ll pay for the policy.