Life Insurance Equals Peace Of Mind
It's unfortunate that so many people wait until a crisis is upon them to purchase life insurance. They may not be able to think rationally under such stress, and they will certainly be paying more for what could have been routine protection. This article will help you understand why insurance is important and the various types available.
There are two main types of life insurance: term and permanent.
Term insurance is a low-cost, temporary form of life insurance that provides coverage for a specified period of time. The policy doesn't build any cash value and the benefits aren't payable for the duration of the term. With term insurance, you can have coverage in place to replace your income for a number of years before you need to take another look at your protection needs.
Permanent Life Insurance is whole life, universal life or variable life insurance that builds cash value over time. It can also be converted into a retirement plan, which would provide you with a stream of income during your later years. Permanent life insurance is more expensive than term insurance, but the costs are offset by the cash values that build up over time. The cash value can be used for any purpose including paying for children's college expenses, replacing lost income or adding to an emergency fund.
There is also a hybrid between term and permanent life insurance called "modified endowment contract." This type of policy builds up years of coverage that can be either used to pay premiums on permanent life insurance or paid out in the form of a lump sum.
A typical life insurance policy covers your life as an individual, but what happens to the ones you love if something happens to you?
A key person insurance policy, or key man insurance, is a popular way for families or businesses to protect themselves in case of an untimely death. Recently purchased term life policies don't usually qualify for this type of coverage, so you may need to carry it out separately or convert your existing term policy.
If you die during the term of your key man insurance policy, the beneficiaries will receive a cash payout from the company as if the policy had been in force for its full duration. This is a relatively inexpensive way to protect the people you love and ensure that they can continue with their lives if something were to happen to you.
Since life insurance is usually one of the more expensive forms of coverage, it's easy to see how young families or those with limited budgets could put it off. If your children are young, consider establishing a savings account that they can't touch until they are in their adulthood. Then use your coverage as an income replacement instead of relying on them for covering expenses.
The same tactic is a good way to get started on funding your own retirement. Instead of contributing to a 401(k) plan at work, you can put that money into a separate account and add life insurance as the primary source of income replacement after retirement. The money that would have been contributed to retirement could instead build up over time, with added protection in case of an untimely death.
The rates for life insurance depend on your age and medical history, but it's generally one of the more affordable forms of protection. If you're healthy and don't have any major family obligations, a term life insurance policy should be in your future. It's one of the fastest and easiest ways to prepare for a financial crisis without spending too much time or money on it.
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About the Author:
Patrick J. Schwerdtfeger is a freelance writer who specializes in home and life insurance topics. To learn more about these issues, visit his website at www.pjschatline.com or contact Patrick at patrick@pjschatline.com .
Copyright 2003-2007 Patrick J. Schwerdtfeger. All rights reserved worldwide .
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Posted by: Patrick J. Schwerdtfeger
Reference Source: Questions To Ask When Getting Life Insurance [ARTICLE START] Many people have complicated lives that require insurance so they can live comfortably during the times when they are unable to work due to accidents, illness or old age. This article will help you understand how much life insurance you need and what questions to ask your agent when shopping for coverage.
What is life insurance?
Term life insurance is the simplest form of coverage that helps protect your family in case of your untimely death. For example, if you die in an accident, term life insurance would pay out a lump sum that would help cover funeral expenses, mortgage payments or college tuition. The policy is usually purchased for a specified period of time so the coverage doesn't last forever unless you take out additional policies.
How much should I get?
The answer depends on the needs of your family and what kind of assets you have at your disposal. For example, a 20-year-old just getting started on their career probably does not need a $2 million policy when $250,000 would be more than sufficient. On the other hand, if you have older children who are going to college soon, it may be wise to consider a higher coverage amount since you could make mortgage payments for more than 20 years.
How do I find the right insurance company?
Choosing an insurance company can be a difficult task in itself because there are hundreds of companies out there offering various benefits. You shouldn't have to settle for the first one that comes along, so spend time shopping around and comparing rates from several companies.
Conclusion
With the right amount of life insurance, you can make sure that your family is provided for if something were to happen to you. It doesn't need to be expensive or complicated in order to offer peace of mind, and insurance companies have come a long way in making things easier for both consumers and agents.
About Patrick J. Schwerdtfeger is a freelance writer who specializes in home and life insurance topics. To learn more about these issues, visit his website at www.pjschatline.com or contact Patrick at patrick@pjschatline.com .
Copyright © 2005 Patrick J.