There are two types of life insurance to choose from, and before you commit to buying either one you should have a good understanding of what each can offer. They both have pros and cons. When it comes to life insurance, you do need to read the small print.
Term is bought more frequently than any other kind. It is in force for a certain period of time, the term, and coverage can be purchased for 5, 10, 15, 20, 25 and in some cases, 30 years.
One drawback with term insurance is that you need to actually die during the term of the policy in order to have your survivors benefit. One reason term insurance is so much cheaper is that the insurance company is actually betting on whether you are indeed going to die.
They charge depending on your level of insurance risk and then they determine how likely you are to die during the time they are covering you. Your premiums will increase if you are over 50, have heart problems, survived cancer, or are a smoker – these will surely put you into a high risk category.
Cash value insurance is another option. Also referred to as whole or universal life, this type of insurance is much more expensive for even less coverage. Unlike term, a policy will cove you you for your whole life, but of course you are paying premiums for your whole life as well.
Cash value also comes with an investment option. You can select various funds and stocks to invest in and you are guaranteed a return on your investment. However, read the small print in your policy, usually within the first few pages, that discusses your investment return. Even though the company might promise you a return of about 15%, you personally only get about 3-4% – the company keeps the rest.
Also when you are reading the fine print, you should look for the section that talks about exactly what funds will be paid out upon your death. Your family doesn’t get the cash value and the death benefit! They get the death benefit – the face value of the policy. The company keeps your cash value.
Last but not least, if your insurance agent tells you that your policy will pay for itself after so many years, ask how this is done. Agents want their customers to believe that after about 20 years no more premiums are due. This isn’t true at all. Premiums are due, but they are taken out of your cash value portion, reducing it significantly. If you ever need a loan, you’ll be in trouble.
When your trying to find Life Insurance quotes picking the right place first can seem daunting. But to get the best rates on Life Insurance, you need to look around and compare. Go online to find the best rates today!