Life Insurance

Face it.
If you are a responsible adult with dependents, life insurance is something you should have already. If not, then this article shall enlighten you.

Life insurance should not be be confusing. So let's figure out what you need in terms of coverage by considering your life circumstances.

What Kind of Life Insurance Coverage Do You Need?

Choosing the type of life insurance coverage you need necessarily gets into lifestyle choices. The choice is dependent on each individuals or family's needs. There are three basic types of life insurance policies. Choosing the one that is right for you is our concern for the moment.
The three different types of life insurance policies are:

Universal Life Insurance....usually bought when young and builds cash value
Whole Life Insurance........usually bought when young and builds cash value.
Term Life Insurance.........fixed rate for fixed benefit

Ok.
So let's get to the big question.
What kind of death benefit are we looking at?
This is the amount that your wife and kids will receive if you die. A quick way to figure out how much life insurance you might need is to take your current annual salary and multiply that by 7. For example, if you make 50,000/per year then I would recommend buying a minimum of $350,000($50,000 X 7= $350,000). If you have an outstanding mortgage balance, that's another consideration.
Do you have kids in college? That is another thing to think about.
Basically, it's a balancing act between how much you can afford and how well you want your dependents to live after you expire.

Choosing an Insurance Company

When looking for a life insurance company, a low premium is important but it is also important to know about the financial strength of the insurance companies you are interested in. By choosing a company that has apparent financial strength your worries that the company will be able to pay your life insurance claim when needed shall be reduced, although as we have seen in this new economy, nothing is absolute.

When you've narrowed down a list of life insurance companies to contact, have all personal information available. Your name, social security number, address, phone numbers, and places of work will be necessary to have on hand. Also, be aware that if you are getting life insurance from anywhere but your employer, you will probably have to take a medical exam. Different life insurance companies test for different things during the medical exam and they all test for AIDS. All companies charge different premium rates for smokers, so, if you are a smoker you will want to search around for a life insurance company that has the best rates for smokers.


Term or Cash Value Insurance?

If you are looking for a low cost, basic life insurance plan then term life insurance would be your best choice. Term life will give you a certain amount of life insurance for a specific term. Term life insurance is a good choice for people on fixed incomes or individuals not looking to build value.

Cash-Value life insurance (whole and universal) is more expensive but will build cash value that you can borrow against in the future. This is a good option for someone interested in having a life insurance plan well into their retirement years and want the value accrued to cover premiums.


Term life insurance policy premiums are generally much cheaper than cash-value policies (universal and whole) especially if you are young and in good health and a low cost term life insurance policy does exactly what you expect it to do by financially taking care of your beneficiaries if you die. Here's the basics of a low cost term life insurance policy:

Purchasing a Term Life Insurance Policy

You buy a low cost term life insurance policy with a specified time period, usually one, five, or ten years. During that "term" you pay a specified premium. Remember, if you put off purchasing a policy until you are older it will cost more. Your beneficiaries will receive a death benefit if you die during the term of the life insurance policy.

Facts About a Low Cost Term Life Insurance Policy

Simple, right?
Well, as with all insurance, there are loop-holes and and little twists you need to be aware of. The death benefit can change throughout the term life insurance policy depending on whether you choose decreasing, level, or increasing term life insurance. So, what happens when your term expires? That's where renewable and/or convertible term insurance options will need to be decided upon. For example, you want a basic 10 year low cost term life insurance policy with the death benefit to stay the same throughout the term life insurance policy and at the end of the term you would like to "convert" to a different term life insurance policy such as a cash-value policy, without taking another medical exam. If this is the case, you would choose a level term convertible life insurance policy.



Understanding Your Life Insurance Policy

Now that you have your policy, take the time to learn about it. If you have questions don't hesitate to contact the insurance agent who sold you the life insurance policy. It is much easier to have the answers to your questions prior to making a claim.