Life Insurance — Life Insurance Plans, Coverage & Quotes
Life insurance is essential when you have a family relying on you. Studies predict that you will need anywhere from five to 15 times your annual salary in order to continue to provide your family with the lifestyle they have become accustomed to after you’re gone. Life insurance and health insurance are closely related; they are often sold by many of the same companies. Some of the same companies offer life insurance policies to individuals in addition to health insurance. Neither decision should be made rashly, but the process of looking for health insurance often causes a person to examine their life circumstances. That is a good mindset in which to begin thinking about life insurance.
A life insurance policy is meant to provide peace of mind to a family upon the death of the policyholder. The payout of the insurance for your life can be used for multiple purposes, such as funeral expenses. Your beneficiaries can also use the life insurance payout to settle any family debts. A high quality life insurance plan will reduce the burden on your loved ones.
There are three main types of life insurance offered by life insurance companies. Term life insurance is the most affordable type, since the risk undertaken by the life insurance company is reduced compared to that of other forms. A term life insurance quote is usually the cheapest one for a given policy cash value. This is possible because the cash value of a term life insurance policy is only paid out if you die within the term of the life insurance contract. Standard term life policies are sold in five-year increments, for periods between five and 30 years. You must pay back any loan you borrow from your term life insurance policy with interest, in order to avoid having that amount deducted from any future payout to your family. Therefore, term life insurance does not earn interest and is not a method of savings.
Whole life insurance remains in effect for as long as you continue to pay the life insurance premiums. Other benefits include the fact that guaranteed cash values accumulate from a portion of your premiums, and will be paid to you periodically–which can help when planning for retirement or college education for your children. If you surrender the policy for whatever reason, the entire guaranteed cash value will be paid out. The actual amount and number of guaranteed cash values provided varies between whole life insurance products, as well as individuals. This type of life insurance also has the possibility of earning dividends in the case of a life insurance company spending less than they accounted for when calculating the whole life premiums they would charge.
In addition, premium payments remain steady under most whole life insurance plans. This makes whole life insurance appealing to younger people unlikely to pass away during the period a term life insurance plan covers, since their monthly premiums will be lower. However, these advantages make a whole life insurance quote more costly.
Variable life insurance is the most flexible type. However, this freedom means that variable life insurance rates are expensive. With variable life insurance, a policyholder has total say over how the cash value of their policy is invested. A variable life insurance company lets you invest the cash value in any financial market you feel will be best for your family: a combination of bonds, stocks, and/or money markets. When buying family life insurance, you may choose to be more conservative than you would be with your own investments in order to protect your funds, but also keep in mind that you should take enough risk in your investments to combat future inflation. If you are experienced and confident in your investing ability, a variable life insurance policy may be for you.
What should you look for when buying life insurance for your family? The cash value of the policy should ideally be at least several times your annual base salary, plus any debts such as outstanding mortgages or credit card bills. You also need to make sure that you can afford the monthly premiums in your family’s budget.
VitalOne’s licensed life insurance agents are here to help you select the best life insurance policy for you and your family.