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Life Insurance Basics
Written by: Brian Gardner
One of the most important things you can do as parents is to ensure
the financial welfare of your children in the event of your death.
Life insurance is the best way to be rest assured that your children
will be taken care of if you die. Although we never like to think of
that kind of thing happening, but it does.
What is Life Insurance
Life insurance is a policy that you can enter with your insurance
company, which promises a certain amount to your beneficiary(ies) in
the event of your death. Usually, a spouse will name the other
spouse as well as their children as beneficiaries of the policy. As
part of the agreement with life insurance, your insurance policy
will be a monetary value, that you will in return, pay a monthly
premium for. Premiums usually depend on your age, gender,
occupation, medical history and other factors.
There are other types of life insurance that may provide benefits
for you and for your family while you are still living. These
policies can accrue a cash value on a tax-deferred basis and can be
used for future needs such as retirement or your child's education.
Do I Need Life Insurance
Earning an income allows you and your family to do many things. It
pays for your mortgage, buys cars, food, clothing, vacations and
many other luxuries that you and your family enjoy. However, certain
situations can cause you to lose your income, and those who depend
on you also depend on your income. If any of the following
statements about you and your family are true, then it is probably a
good idea for you to consider life insurance.
 You
are married and have a spouse.
You
have children who are dependent on you.
You
have a parent or relative who is aging, or disable and depends on
you.
You
have a loved one in your life that you wish to provide for.
Your
401K retirement plan, pension and savings aren't enough to insure
your loved one's future.
What Are My Life Insurance Options
There are four basic types of life insurance that can meet you and
your family's needs:
Term Life Insurance
This is the least expensive type of life insurance coverage, and at
least at the beginning, the simplest. Term life insurance policies
do not accrue cash value, and are fixed over an extended period of
time - usually one to 0 years, and they can be renewed. This life
insurance policy pays the beneficiary of your policy a fixed amount
in the even that you die in the period of time that your policy
includes. The premiums of term life insurance are lowest when you
are young and increase as you get older
Whole Life Insurance
This type of life insurance is similar to term life insurance, as
well as provides cash value. Over time, whole life insurance
generally builds up a cash value on a tax-deferred basis, and some
even pay it's policy holders a dividend. This type of life insurance
is popular, doe to the cash value that is accessible to you or your
beneficiaries before you die. Used to supplement retirement funds,
or to pay for your child's education, whole life insurance should be
used for protection, rather than for accumulation.
Universal Life Insurance
This type of life insurance is a flexible kind of plan. These
policies accrue interest and allow the owner to adjust the death
benefits and premiums to their current life situation. You decide
the amount of premium for universal life insurance, and of you skip
a payment, this will be deducted from your death benefit. Universal
life insurance stays in effect as long as your cash value can cover
the costs of the policy. These rates are subject to change, but they
can never fall below the minimum rate that is guaranteed when you
sign up for universal life insurance.
Variable Life Insurance
This type of life insurance is designed for people who want to tie
the performance of their life insurance policy to that of the
financial market. The policy holder gets to decide how the money
should be invested, and your cash value has the opportunity to grow
more rapidly. However, if the market is poor, your life insurance
policy's death benefit will be poor. As with whole life insurance
and universal life insurance, you may withdraw against the cash
value. Be reminded that withdrawals of this life insurance policy
will be deducted from the cash value.
How Can I Save Money With Life Insurance
Below you will find some suggestions on ways to save money while
purchasing the life insurance policy that is right for you.
If
you don't need life insurance, don't buy it. Don't buy more
insurance that you actually need in order to provide financial
security for your family.
Shop
around for competitively-priced life insurance policies while you
are healthy. Don't smoke, or do anything that might increase your
rates. Take care of yourself by exercising regularly and maintaining
a moderate and healthy weight.
If
you purchase a term life insurance policy, look for guaranteed and
renewable policies. That way you won't have to periodically continue
to shop around for those life insurance policies.
You
should only buy optional forms of coverage such as riders only if
necessary.
Shop
around and compare life insurance policy rates and coverage. There
are thousands of life insurance companies to choose from. It is
advised that you get at least three separate quotations of life
insurance, and then decide which is the best for you.
About the Author
Brian Gardner
is the Founder of PregnancyEtc.com - An Online Pregnancy
Resource For 9 Months & Beyond. Having recently experienced
pregnancy firsthand with his wife Shelly, Brian has
dedicated his efforts towards pregnancy research and family
planning.
Visit Brian's
website at
http://www.pregnancyetc.com. |
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