Life Insurance — Life Insurance Plans, Coverage & Quotes
The purpose of life insurance is to pay out a cash sum upon the policyholder’s death. You pay premiums every month in order to avoid financial catastrophe later. Most financial experts recommend that people who have dependents who rely on their financial support (e.g., spouse, partner, kids) buy life insurance. The average college student doesn’t fit in this category. As a result, a life insurance policy may be unnecessary in this stage of your life. However, if you do have a steady income and people whom are financially dependent on you, you may be interested in buying life insurance. In that case, you have several options.
If you want the cheapest life insurance, ask for a term life insurance quote. It is inexpensive compared to other types of life insurance with the same cash value. This is because the life insurance company’s risk is reduced. Most life insurance companies sell term life policies for periods between five and 30 years, in five-year increments. The cash value is only paid out if you die within the life insurance term. Life insurers are betting that you will outlive your life insurance policy in order to keep term life insurance rates low. Term life insurance does not serve as a method of savings or earn interest; although you can borrow from your term life insurance policy, it must be paid back plus interest to avoid that amount being deducted from any future payout. On the one hand, the affordability of term life insurance appeals to cash-strapped students; but depending on the length of the policy, you are likely to outlive the contract and lose all of the money you paid in premiums.
Whole life insurance remains in effect for as long a period as you want–as long as you continue paying the life insurance premiums. Also, guaranteed cash values accumulate from a portion of your premiums, and are paid out periodically–which can help in long-term planning for retirement or college education for your children. The entire guaranteed cash value will also be paid out upon surrender of the policy for any reason, in addition to the standard payout upon death. This type of life insurance also has the possibility of earning dividends, if a life insurance company ends up spending less on you than expected. The actual amount and number of guaranteed cash values provided varies between whole life insurance products.. In addition, premium payments remain steady under most whole life insurance plans. This makes whole life insurance a good choice to young college students looking for insurance but unlikely to pass away during the period a term life insurance plan covers. Monthly premiums are lower, leading to a cheaper whole life insurance quote, though the overall cost of whole life may be higher over time.
Variable life insurance that it offers students the greatest amount of control over their money. With a variable life insurance policy, the policyholder has complete say in the investment of their policy’s cash value, deciding the percentages allocated to bonds, stocks, and money market funds. These policies also last a lifetime. These advantages mean that variable life insurance rates are the most expensive type. Selecting sound investments is essential with a variable life insurance policy. You may want to invest a bit more conservatively than you would in your other personal investments. If you are experienced and confident in your investing ability, variable life insurance may be the solution for you.
How much life insurance should you get? First, you must find out how much cash you need from a life insurance policy. Common methods include finding the product of your annual base salary and a multiplier such as six or seven, and incorporating debts like credit card and mortgage bills. It is also important for you to choose a life insurance plan that fits within your current budget. The ideal is a balance between current and future financial needs.
Are you a student in search of life insurance? VitalOne’s licensed life insurance agents are available to help you select the right kind of life insurance policy for you and your loved ones.