In tough economic times, many people think they cannot afford life insurance. However, protecting a family and loved ones should never be considered a luxury expense. There are many life insurance options, and conducting a careful research to compare available options and life insurance companies will result in finding the right life insurance policy that doesn’t break the budget.
There are three basic types of life insurance policies.
• Term Life – the most basic and least expensive form of life insurance for the person who does not have complicated assets but wants to provide financial security to dependents. Many policies allow the insured to renew the policy at any time, as there is generally a policy end date after a specific period of time.
• Whole Life – this form of life insurance provides lifetime protection, but comes with higher upfront premiums in the beginning of the term of the policy. Whole life generally comes with the ability to borrow against the cash value of the policy.
• Universal Life – this type of life insurance was stated in the 1980s and is a combination of term life and tax-deferred savings plan that earns interest. It is generally paid for upfront, and the payment includes the fee for the management of the money in the plan.
There are variations of these three types of life insurance plans, depending on the needs of the person seeking the insurance.
Benefits of Life Insurance
Most young people who are starting a family think about life insurance. In today’s economy, two household incomes are almost a requirement to provide a decent lifestyle for the family. Should one of those incomes be lost due to unfortunate circumstances, the family could be put into financial difficulties. Life insurance ensures that the children and spouse do not have to reduce their lifestyle in the case of death.
Life insurance provides security and peace-of-mind for families, but is also important for aging populations. A popular form of term life insurance policies called death benefit policies will provide coverage for funeral expenses and any outstanding financial obligations for people as they age. These policies can also provide a bit of assistance to children and grandchildren to cover increasing expenses of living, education and emergencies.
Term Life Insurance Policies
Term life policies costs less than whole life, but does not come with the ability to borrow from the policy. It is often suggested by financial advisors that a person should purchase term life and invest the difference in the premiums between term and whole, as the investment will generate a higher interest rate of return.
Term life provides a guaranteed payment of the face value, or dollar amount, of the insurance policy if the person dies within the set life of the policy. The set time, or term, of the insurance policy can be anywhere from one year to five or ten years or longer. If the person does after the term of the policy is over, no monies are paid to the policy beneficiaries. However, many policies allow the insured to renew the policy without medical checkups, though as a person gets older the cost of the policy gets more expensive. Some term life insurance policies allow the insured to convert the policy to whole life or other permanent life insurance policies without medical checkups.
Senior term life insurance ensures that loved ones are not left with the burden of funeral expenses and financial obligations of the deceased. These policies are also generally for a set period of time, and usually come with face values of £50,000 or less, though higher values are available.
For a person with financial dependents looking for a basic insurance policy that provides protection without costing a lot of money, term life insurance policies offer that security. Living expenses are steadily increasing, and the cost of a college education is increasing each year. The best gift to give loved ones is financial stability and permanence regardless of what life brings.
More articles on life insurance can be found on onlineinsuranceguide.co.uk.