Whether you’ve decided that you need a life insurance policy or you have been approached by one of the representatives of a Life insurance company to introduce their various plans, it is apparent that you are realizing the importance of getting a life insurance policy or you wouldn’t be here, reading this.
Life is full of surprises; some good ones and some very nasty ones. It only makes sense to protect your loved ones in any way possible in case of accidents and death. At least financially, you will have your peace of mind that your family is being provided for.
But now that you’ve made your mind, on getting life insurance, the biggest challenge is the overwhelm of the choices and policies and insurance providers available. You have to take a deeper look at your own individual needs and then swift through the potential policies on the basis of that. In this article, we have tried to give you an overall picture of the Life insurance policies and their types available.
What does your personal situation look like?
When it comes to life insurance policies, there are quite frankly an overwhelming amount of choices available, but since each individual personal situation is different, take into account your situation. How many dependents do you have? If you don’t have any dependents, you may not need life insurance at all. If you support your family in any way and contribute to the overall income, then you most probably will need life insurance.
If your salary contributes to paying off bills, mortgages or if you are planning to send your kids to college, then you should definitely get life insurance to secure the financial future of your family by taking care of these financial obligations in the case of any accidents or death.
How Much Coverage Should you get?
There is no one size fits all in this situation. The coverage you need depends heavily upon your lifestyle, your debt and/or savings, your current financial obligations, and the number of kids you have.
A general guideline to follow is taking your annual income and going for at least 5 to 10 times that number for decent and secure coverage.
Beyond this, you can seek help from a financial consultant to analyze your needs and advise you accordingly.
The Types of Life Policies available
There a several types of policies available, but they can all be categorized into these four types of life insurance. These are whole life, term life, variable life, and universal life policies.
Whole life policies offer death as well as cash value but are more expensive compared to term life and other types of life insurance. This is the type of life insurance where your insurance premium remains the same throughout the term until you’ve paid off the policy.
The policy remains in effect, and you get all the benefits until your death, even after you have paid all the premiums.
These are most expensive because of large sums of commissions to the tune of thousands of dollars the first year and the fees involved limit the cash value in the early years. Most people don’t realize this because they are hidden into investment formulas and incremental growths that you don’t really that most of this money is pocketed by your insurance agent.
Variable life policies are like most investments, dependent on how well those investments are doing. They are permanent life policies where by your cash reserve is invested by your insurance provider according to the choices offered to you.
Another form of permanent life insurance policy is the universal life insurance policy that allows you to have variable premium amounts and variable death benefit. The way they work is they use part of your accumulated earnings to pay off your premiums. One thing to note here is that this usually incurs higher administrative fees.
As a general rule of thumb, if you are under the age of 40 and don’t have a family medical history for a life-threatening illness, you should aim for general term insurance which will offer a death benefit but no cash value.
The least expensive life insurance you can get your hands on is through your employer. Most companies and corporations offer insurance as part of their packages. These policies are usually term policies, meaning they cover you for as long you work for that employer. Depending on the duration, some policies are also allowed to converted upon termination.
The costs of other types of life insurance rely upon a lot of different factors. It depends on your personal needs, funds available but also upon the underwriter’s practices and the commissions paid to the agent. The costs take into account your life expectancy and risks involved to calculate how much premium you should be paying.
Beware of the hidden costs. Most life insurance policies have costs of one kind or the other often disguised in jargon and part of the complex mathematical investment calculations. They usually come to light after you’ve already purchased the policy.
One risk fee way is to hire a consultant, who for a fee-only deal, objectively researches the best life insurance policies available as per your needs and recommends the best options without any bias and affiliation. Make sure that you’re a consultant who is not on a commission-based deal with the providers and works independently.
Depending on your needs, clarify your choices, and do your due diligence. It is a good idea to take your time. Use the internet to research what’s available and if possible, hire an independent consultant who without any bias, can objectively help you with the best possible options for you.
It is really important that you are savvy and you educate yourself before seeking professional help as it is extremely easy to get lured in by agents or to get overwhelmed with all the choices available out there.
Check out National Guardian Life Insurance for the best life insurance policies in America.