Overview Of Life Insurance Basics

by | Nov 27, 2015 | Types Of Life Insurance


Life insurance basics state that one should get a life insurance policy as a means of protecting their family, investments and the overall financial stability of those they consider dear to them in the event that an unforeseen incident occurs separating them from their family forever. The last thing anyone wants is to leave an expensive mortgage, hospital and burial bill for their loved ones after they pass on and through various life insurance plans you can prevent many financial struggles after you pass on. Furthermore an insurance policy gives your benefactors a bit of leverage and taxation shelter to allow them to gain ownership of all that you have left for them.
It’s important to remember some basics of life insurance as you are making your decision. For starters you will need to determine how much money your family would need in the event of your death; this can be retirement, paying off of a mortgage or even sending your kids to college. You will then need to determine which type of policy will work best for you. Obviously if you do not want to deal with investments and securities then you will want to stay away from the variable universal plans.

Some term life insurance basics that you should keep in mind are that if you are under the age of 50 or so, it’s most likely the type of policy you should purchase. It will almost certainly be cheaper than whole life, and you may want to separate the investment aspects that whole life insurance usually involves from your other investments altogether.

Whole life insurance basics include the fact that you can borrow against the cash value of your policy, and that you need to look at internal rate of return of the policy, ie the yield on the policy after all fees and charges are subtracted. A whole life policy tends to be more complicated then term life, and it would be a good idea to get a professional to help you analyze a whole life policy that you are considering.

Do your research on the companies that you are thinking about choosing from because there are quite literally thousands of companies out there who are offering life insurance policies and some of them may not be in your best interests. Then look around to see who is offering the best prices for their plans before looking into ways to save on your annual life insurance policy premiums.

You may also want to look into which type of plans can offer you the best leverage to borrow against. Remember, you are paying the premiums to the company who holds them for safe keeping not until you pass on, but rather until the policy matures. If you happen to pass on, they will still guarantee the full amount even if you have not paid all of the premiums at that time but you will have to read the fine print to determine if they truly will pay the full amount. Once you have a policy though it is also just as important to make sure that you do not go and start missing premium payments or you could forfeit the entire amount.

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