Cheap Life Insurance Policy
An important aspect of life is ensuring that your family will be financially secure after you pass away. One way to do this is by purchasing a life insurance policy. However, it can be daunting and expensive to decide on the best type for your budget — consider these options in order to keep your finances healthy while saving money. A cheap life insurance policy should cost less than $1,000 at the time of purchase and will cover nearly all expenses associated with death. This includes funeral costs, medical bills, home mortgage or rent payments for up to 18 months after death, funeral home expenses and loss of income due to sickness or injury due to accident or illness (or both) with no need for disability coverage beyond social security benefits.
A term life insurance policy (also known as level term or pure term or universal life) is designed to cover one risk: the risk of dying too soon. Term policies are much cheaper than universal life, whole life and final expense policies because they do not include a savings component and have lower cash value than permanent life insurance. A cheap term policy may cost between $1,000 and $3,000, depending on location, health factors and whether the buyers are healthy or if they have pre-existing conditions.
Retirement funds such as 401(k) plan balances are not an option for term life insurance because they cannot be replaced. This is not true for the other types of life insurance. For example, a cheap whole life policy can be added to your retirement fund, just as you would with any other type of insurance. The policy pays out only upon your death so that it does not have to be replaced after paying out; however, its cash value can be added to a retirement account in the event that you die unexpectedly without having adapted any of it.
A universal life policy (also known as a whole life or permanent life insurance) is a type of insurance that is designed to provide lifetime coverage and pay out an entire policy value upon the insured's death. The death benefit is usually set at the end of each term, and decreases with each renewal. This eventually pays out only after decades of having paid premiums, which can be up to 60 years. The amount of premium with which you begin a policy does not affect the payout; it will always be equal to or less than any "gain" made by paying more in premiums over time.
The whole point of a universal life policy is to provide coverage for life. It can be used as an investment vehicle in addition to providing insurance by adding additional cash or increasing the death benefit over time. The conversion of whole life policies into retirement income was addressed by the Pension Protection Act (2006) which meant that premiums paid before 2006 could be used for retirement income. This provision was repealed in December 2014.
A permanent life insurance policy (also known as final expense insurance, guaranteed acceptance, or level premium) is designed so that the death benefit will always equal a predetermined amount of money set at the outset of the policy — regardless of how long you live. This policy is usually more expensive than term life insurance, but cheaper than term life insurance within the first 15 years.
A cheap permanent life policy can cost as little as $3,000 for a couple in their mid-50's who are in generally good health. These policies are less often chosen than the others because people want to ensure they have coverage throughout their lifetime; however, there is no guarantee that someone will live past 85 without any sort of pre-existing conditions or health problems. Permanent policies are more appropriate for retired people who have paid off their mortgages and want to ensure that their spouse or family will be taken care of financially after death. They are also more appropriate for people who have accumulated substantial savings and investments through the years.
A final expense policy (also known as a universal life policy or an accelerated death benefit) is similar to a cheap universal life policy in that it offers death benefits; however, it does not include any savings or investment features. It is also different from a cheap term life insurance policy in that the insured can choose when they want to die. Whereas a term life policy only pays out upon the insured's death, this kind of policy will pay out no matter how long you live — but only if you die within the first year of signing up for it. This means that you can select your own death benefit, ranging from $12,500 to $500,000+ — and you can change it at any time. The death benefit will remain unchanged for the next 12 months if you do not change it.
The reason this kind of policy is cheaper than a universal life policy is because it does not offer any savings or investment options, making it less complicated. It is also more expensive than term life insurance because you can choose to die at any time from the day of purchase through the following year. The cash value will last only 12 months, but the insurance lasts for as many years as you like. This policy provides the highest return on your money; however, it is only appropriate for people who have already purchased all of their long-term assets and investments and need protection in case they outlive their savings.
A final expense policy is very similar to a "whole life" insurance policy, except that with a whole life policy, the death benefit can be guaranteed only up to age 80. A final expense policy guarantees that a cash value will exist at time of death no matter how old you are. The same payment schedule exists for both kinds of policies; however, while whole life pays out only after a set number of years, the amount paid out on a final expense policy is fixed and known from the beginning.
A final expense policy will pay out if you die within one year of purchasing it — regardless of your age or the reasons for your death. Because it is guaranteed to pay out the full death benefit, you can choose to die at any time within the first year. Even if you are elderly and have already lived a long life, your policy will pay out no matter how long you live. This kind of policy is excellent for people who want to be sure that their loved ones will not have to worry about money. However, it cannot be considered a replacement for policies such as term life or universal life — so not only should you make sure that your loved ones are covered by term or universal policies, but also that they include a final expense policy in their wills.