Life Insurance Policy-Ways To Choose The Best One
iBefore choosing a life insurance policy for yourself; make sure that you have considered all the options available for you. Different insurance types suit different needs. The type of insurance one person takes may not suit your needs. So it is always wise to compare one life insurance policy from another life insurance online or through their agents. However, you have to be careful with insurance agents because they will drag you into one type of insurance policy just because of more commissions they get from it.
Term life insurance is life insurance coverage for a fixed period that commonly ranges from 10 years to 30 years. You will get coverage for the amount of time that you have selected. However if you die after the term expires, it will not give any coverage. This type of life term insurance is ideal for people who are building up a family so that they can provide coverage while their kids are still young and still financially dependent on them. This will also give your family protection until you will have enough savings in the future. Another advantage of a term life insurance is that it is cheap especially if you get the longer term periods.
On the other hand, cash value life insurance, also known as the universal life insurance, gives you both coverage investment option. One advantage you have with this is: you get covered for the rest of your life after purchasing the policy. In a cash value life insurance the premiums you pay include the cost of coverage as well as savings. However, it may not suit you if you are looking for cheaper monthly rates because their quotes are much higher (3 to 4 times) than term life insurance quotes.
Here is a good analogy some financial planning experts give while choosing a right life insurance. Getting a term life insurance policy is just like renting a house while choosing a cash value or universal life insurance is just like buying and owning the house. With a term life insurance you pay a monthly fee to cover the cost of insuring you. However, if you leave and decide to transfer to a new house, you have to forgo the amount of money you have paid for it in the past. A term life insurance is like this because if your term period has expired, you will no longer be insured even if you have already paid 20 years worth of insurance.
On the other hand, a cash value insurance is like buying and owning a house because once you have buy it, you can stay in it as long as you want. This means that you are covered by insurance from the moment that you purchase the policy until the time that you die. Another advantage is that like owning a home, you get to have equity for your home through your mortgage payments. Cash value insurance also puts a portion on what you pay regularly to an investment option which you can enjoy once your policy matures. This amount can be used for whatever purpose you want. However, you should consider carefully the policies because some cash value policies will charge you up to 8% for borrowing the cash equivalent of your investment.
So be careful in choosing the right type of life insurance policy for you. A term life insurance is ideal for those on the budget and for those who want to start a family but does not have a lot of savings yet. Cash value life insurance may suit those who prefer to have more investment options. Whatever the case, it is important to have protection for your family.