Income Tax Rates

Numerous people avoid getting life insurance. The reasons for this avoidance include the belief that it is not needed at this time, fear about not being able to qualify, and the extra expense associated with coverage.

While most agents will disagree, the truth is that there are times in your life when you probably do not need it. Keep in mind that these times are few, relative to the times when it is important for the financial peace of mind for your family.

The many options available can make your head spin, and not all choices are easily understandable by the average person out there. Don't worry: All the different plans can be demystified. Your agent can be a great resource. Following is basic information you need to know:

Straight life insurance, also known as whole life or permanent, is set for life when you purchase the policy as is the death benefit. In general, the younger and healthier you are when you purchase the policy, the lower your premiums for the remainder of your life.

As long as your premium is paid, your beneficiary will receive the proceeds when you pass away. Straight life policies accumulate cash values that you can borrow or withdraw if needed. Remember that borrowing will reduce the amount that will be paid to your heirs, if it is not paid back.

Annuities are a form of life insurance that not only has a death benefit, but can also create a stream of income for you while you are still living. There are several types of annuities, but there are two basic types; fixed and variable.

A fixed annuity pays a fixed yield and has pre-determined payout to you while still alive depending on the date that you annuitize the policy and how many years the insurance company estimates you will live to collect those payments. You also can elect to pay a fixed payment monthly in exchange for a fixed monthly benefit for a specified period of time.

A variable annuity operates in a similar manner, but can potentially pay much better benefits to you because your premiums are invested in the stock market, and have the potential to earn or lose money. Your actual monthly payout, should you decide to annuitize is dependent on your success with your investments. There are also other options available with annuities, but you should talk with an agent for more explanation and discussion about whether or not this is a good option for you.

Perhaps the most attractive kind is term life coverage which is the easiest to understand and is the most economical. Term life is for a specific term (example 10 years), and will pay to your heirs only if you die during the term of the coverage.

Young families can purchase a high amount of coverage relatively inexpensively to ensure that young children will be taken care of in the case of the death of one of the parents. Term life insurance does not build cash value.

Burial insurance is self explanatory. It is meant to pay funeral expenses.

Mortgage life is like a term policy but more expensive. The purpose is to pay off the mortgage in case of the passing of one of the borrowers of the mortgage. The value declines at about the same rate as the mortgage balance declines. Inexpensive term insurance, which retains a consistent life amount through the term of the policy, is a better value.

For more detailed information about what type of policy would be best for your situation, it is always advised that you do your own research, and of course, check with an agent who can address your concerns.