How do I choose which life insurance is the best for me when there are so many options?
There are many people who at some point in their life struggle to spend days happily and pay their bills on time every month. These awkward situations might be the result of the economic environment of the country or because of internal personal issues.
Now, the economy all over the world and especially in America is on the greener side and people are paying close attention to various savings and retirement plans – and that constitutes life insurance as well.
Suppose that you are single and young, and do not make much money, then most would think life insurance wouldn’t be a concern. But, if you have dependents like children, spouse and aging parents, then in the unfortunate event of your death, they may suffer financially. So, it becomes more of a necessity to have a life policy.
But with so many options available, a life insurance buyer mostly gets confused. There is nothing surprising if you are also confused about the advantages your life insurance policy should feature. This article is aimed to remove the confusion you have about buying a policy.
Many surveys from different insurance quote websites conclude that today, almost 40 percent of Americans don’t have a life insurance policy and that around 35 percent of insured people do not completely understand their policy’s terms.
So, there is nothing to be more confused about anymore as there are broadly two types of life insurance people usually buy. They are called “permanent” and “term” life insurance.
Permanent Life Insurance
A permanent life insurance covers you for the whole life until your death. It does not matter if you die tomorrow or after completing more than 10 years, the death benefit will be paid. Furthermore, it is also a savings element which provides many tax benefits. It can also be a source of temporary (borrowed) funds to fulfill various purposes. Tip: Read your policy thoroughly as coverage can change from policy to policy.
A permanent life insurance can also help to borrow funds against it if you have a life event. In borrowing, the loan’s collateral is the death benefit. When death happens before repaying, firstly, dues will be repaid and then remaining amount will be paid to beneficiary.
Term Life Insurance
A term life insurance is best for people who want the coverage for a limited time period. For example, suppose that you are a homeowner, married with kids, who has a 30 year mortgage debt to repay, then, you can buy a term policy to prevent losing the property to the bank. Furthermore, your family will be able to keep the property without having to worry about finding another placed to stay.
In case you want higher coverage at a low premium, then you can go for term life insurance. You remain protected till the time period selected. If low premium and higher coverage in this kind of insurance are the positives, then this is a policy you should consider.
Although, these options will offer a level of protection, both permanent as well as term can be a good thing to have but remember the final decision should always be dependent upon the needs, preferences and pocket of the buyer. That’s why it is always suggested to do proper and thorough research before buying any policy.
You should note that if your financial requirements change over time, term life gives you the opportunity to convert it into a permanent policy. Generally, the conversion will not involve any medical examination, only higher premiums should be paid.
In case of permanent life insurance, the premiums are higher from the beginning and remains constant based on the duration selected.
So, these are the two broad choices you should consider choosing from a policy. Before finalizing the purchase of any policy, ask a lot of questions, especially about the coverage time, fees and charges, loan options and flexible repayments as a start.
#thefrankmedina
