Low Cost Life Insurance
Calculating whether to buy life insurance is a simple proposition: If there are people who you love or care about, who will suffer a loss of income or an increased debt upon your death, you need life insurance. The solution is not whether or not to buy life insurance, but how to choose the right life insurance policy. Low cost life insurance policies vary by provider and local laws and should be sculpted to fit an individual's needs.
Term life insurance is the least expensive option for younger consumers. Term life provides coverage for a stated period of time of your choosing. Rules vary by state, but typically, policies can be purchased for 1, 5, 10 or 20 years. It’s simple, if you purchase a policy for a five year term and you die sometime during the five year period with all of your premiums up to date, the policy will pay your beneficiaries the face value of the policy. You choose the amount of coverage based upon the amount of expenses you will have during those five years.
Term life insurance is a specific low cost answer to a problem: How will your loved ones pay for your bills and other expenses in the event of your death. Unlike whole life insurance, term life is not an investment vehicle. You are not building equity with a term life insurance policy, nor will your term life policy pay dividends. The tradeoff is cost. A whole life policy will carry a much higher premium than the initial premiums of a term life policy. Many young people may not have the money available to pay large premiums, even though they recognize the need of the protection of an insurance policy. As their financial health improves over time, they will gain more options. A low cost term life policy is ideal to cover the type of expenses young consumers pick up early on, such as a mortgage, loan repayment or a child’s education.
At the end of the term, policyholders often have the option to convert their policy to some form of permanent coverage. Many companies consider this a continuation of coverage and may not insist upon any new demonstration of insurability. Policyholders may also be able to renew their term life policies, however, since the policyholder is older, premiums tend to increase uponto them. The amount that term insurance covers, will vary, and the higher the payout is the higher the premium will be, yet the premiums of this kind of insurance are rarely higher than $70 - $100 a month.
Whole Life Isurance is a Little Different Than Term Life
Whole life insurance is another type of policy often refered to as a cash value life insurance policy. They call it cash value because after paying a certain number of years the policy has a certain value and some of the insurance you purchase can be returned to you after a certain amount of time. In other words, if you don’t die, then you can borrow cash that has accumulated in the policy. People who own term life insurance are unable to do this. In term life insurance you don’t get any of the premiums you pay into the policy back and so you don’t have a fund to borrow against.
Both types of insurance are similar in that you can choose coverage from as little as $10,000 to $100,000 and the amount you choose depends on your needs. To get a better understanding of the differences between whole and term life insurance you should consult with a reliable life insurance agent.
