Life Insurance - How To Know The differences
2:55 AM
When researching any type of insurance on one's life, one needs to know there are a few kinds to look at and pick from. These are the basics to know about before making a decision on a life insurance policy.
The major purpose of buying any type of life insurance has always been to provide for family that you leave behind. An unplanned death and associated burial costs can cause major financial issues if the family struggles to find money for a funeral.
One drawback with term insurance is that you need to actually die during the term of the policy in order to have your survivors benefit. One reason term insurance is so much cheaper is that the insurance company is actually betting on whether you are indeed going to die.
They "bet" according to your risk factor and from this they then determine the likelihood of your death or survival. Over 50, heart attacks, cancer survivor, or even high cholesterol will put you into high risk categories and increase your premium.
Cash value insurance is another option. Also referred to as whole or universal life, this type of insurance is much more expensive for even less coverage. Unlike term, a policy will cove you you for your whole life, but of course you are paying premiums for your whole life as well.
Cash value also comes with an investment option. You can select various funds and stocks to invest in and you are guaranteed a return on your investment. However, read the small print in your policy, usually within the first few pages, that discusses your investment return. Even though the company might promise you a return of about 15%, you personally only get about 3-4% - the company keeps the rest.
Be aware that your survivors don't get everything: the cash value and the premium! They get the death benefit only - the face value of the policy. The company keeps everything else for themselves and makes it hard for you to figure this out until it's too late.
Keep in mind as well that these policies do not end up. "paying for themselves." You might get a letter from the insurance company saying you have no further premiums due, but that. 's because the company will start taking your premiums from your cash value savings. Either way, you still end up paying!
The major purpose of buying any type of life insurance has always been to provide for family that you leave behind. An unplanned death and associated burial costs can cause major financial issues if the family struggles to find money for a funeral.
One drawback with term insurance is that you need to actually die during the term of the policy in order to have your survivors benefit. One reason term insurance is so much cheaper is that the insurance company is actually betting on whether you are indeed going to die.
They "bet" according to your risk factor and from this they then determine the likelihood of your death or survival. Over 50, heart attacks, cancer survivor, or even high cholesterol will put you into high risk categories and increase your premium.
Cash value insurance is another option. Also referred to as whole or universal life, this type of insurance is much more expensive for even less coverage. Unlike term, a policy will cove you you for your whole life, but of course you are paying premiums for your whole life as well.
Cash value also comes with an investment option. You can select various funds and stocks to invest in and you are guaranteed a return on your investment. However, read the small print in your policy, usually within the first few pages, that discusses your investment return. Even though the company might promise you a return of about 15%, you personally only get about 3-4% - the company keeps the rest.
Be aware that your survivors don't get everything: the cash value and the premium! They get the death benefit only - the face value of the policy. The company keeps everything else for themselves and makes it hard for you to figure this out until it's too late.
Keep in mind as well that these policies do not end up. "paying for themselves." You might get a letter from the insurance company saying you have no further premiums due, but that. 's because the company will start taking your premiums from your cash value savings. Either way, you still end up paying!
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When your trying to locate Life Insurance quotes picking the correct place first can seem daunting. But to get the best rates on Life Insurance, you need to look around and compare. Go online to locate the best rates now!
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