Life Insurance — Life Insurance Plans, Coverage & Quotes
If you have a spouse, partner, and/or children that depend on you financially, having some form of life insurance is essential. 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 is closely intertwined with health insurance. In many cases, both are offered and bought simultaneously. 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.
Life and health insurance, pre existing health insurance are each meant to protect against financial ruin under unexpected circumstances. In the case of a life insurance policy, that circumstance is the death of the policyholder. The payout of the insurance for your life can be used for multiple purposes. For example, it can be used to pay for funeral expenses. Your beneficiaries can also use the life insurance payout to settle any debts you may have; unfortunately, your financial obligations do not cease after you pass away. A high quality life insurance plan will reduce the burden on your loved ones.
The average life insurance company offers several varieties of life insurance. Most affordable is term life insurance. A term life insurance quote is usually the cheapest life insurance, as compared to other types with the same cash value. This is because the life insurance company’s risk is reduced. When you buy a term life insurance policy, the cash value is only paid out if you die within the life insurance term. Most life insurance companies sell term life policies for periods between five and 30 years, in five-year increments. In essence, 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 life insurance policy, it must be paid back with interest. Otherwise, that amount is deducted from any future payout.
Whole life insurance is different. Unlike term life, whole life remains in effect for as long as you want. If you keep paying the life insurance premiums, you can keep your whole life policy. There are other benefits to whole life insurance. For one thing, guaranteed cash values accumulate from a portion of your premiums, and will be paid to you 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. 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 similar to whole life in that it is also permanent, except that it offers an individual greater control over his or her money. This control comes at a price; variable life insurance rates are the most expensive of all. Life insurance is considered variable when the policyholder has total say over how the cash value of their policy is invested. When you buy from a variable life insurance company, they allow you to make investments in anything from relatively safe bonds to potentially risky stocks, as well as money market funds. A variable life insurance policy can turn out very well in the right hands, but it can also result in financial catastrophe. Selecting sound investments is critical; it is also recommended that you skew slightly more conservative compared to your other personal investments–after all, this is meant to be a safety net for your family. If you are experienced and confident in your investing ability, variable life insurance may be for you.
There are several factors that should be considered when looking into buying life insurance. First, you must calculate the cash value desired from the life insurance policy. You can multiply your annual base salary by a number (for example, 5 or 7) in order to figure out how much you need. If you have outstanding debts (e.g. credit card debt, mortgage), it is a good idea to account for them in your coverage, too. Ideally, the value of your life insurance should serve in place of your income for several years. However, you must balance the life insurance’s cash value with your current budget to make sure you can afford the premiums.
VitalOne has licensed insurance agents available to help you select a life insurance policy that is able to protect the ones you love most in your place.
