Steps to Choosing a Life Insurance Policy

In the event of your sudden death would your family be able to survive and carry on financially? For many families, the loss of the main wage earner would be devastating. That is why so many people choose to get life insurance. This type of insurance is something that provides you a peace of mind that when you die, your family is going to be financially taken care of. Most insurance policies are not too horribly expensive, so getting a policy is something that can be affordable for almost anyone. The following will help you through the steps of deciding upon what type of policy you need and how to go about buying one.

Do You Need A Policy?
Before you start figuring out what you need in a life insurance policy and start shopping for one you will need to determine if you even need a policy. Typically, anyone who is responsible for caring for another person or someone who has people they wish to ensure are cared for when they die will benefit from an insurance policy. If you are married or have children then an insurance policy is almost mandatory since you want to be sure they are not left in financial trouble when you die.

Choose the Type of Policy
One of the first decisions that you will have to make about your life insurance policy is to choose either a term or whole life policy. A term policy offers coverage for a set time period. It does not have any cash value. In contrast a whole life policy offer permanent coverage and does carry a cash value.

When it comes to making your choice between term and whole life, you will want to ask yourself the following two questions. The answers will help you to see right away which type of policy is best for you:

Do you want the lowest priced option? If so, then choose a term policy.

Do you want the option to borrow from your policy while you are still living? If so, then choose a whole life policy.

Decide On Your Coverage Amount
You will have various different options in how much insurance coverage you carry. You should take your time in figuring out how much coverage you want. To decide you will want to consider the debts that you have and the financial burden that will come with your death. This can help you decide just how much insurance you need so that your family will be financially stable upon your death.

Once you have decided that you do need life insurance you can begin the process of deciding on what policy is best for you. Deciding if you want term or whole life and choosing the coverage amount are a great start. If you have the information then you can starts hopping around and talking to agents who will help you to find the right policy to suit your needs.

Life Insurance Policies

There are various aspects to consider before getting a life insurance policy. One of them is a sustained doubt about the significance and need for life insurance. A life insurance policy is relevant for all individuals who are concerned about the financial future of their family in case of death.

Apart from the purely protectional needs, life insurance policies, like whole and variable life insurance, offer the opportunity for tax-free investment and reaping dividends, and they have a built-in cash value. Purchased with due discretion, it can be utilized as liquid cash to cater to the various needs of policyholders.

There are various types of life insurance policies customized to suit the different needs of various individuals. Depending on the number of dependants and kind of insurance needs, a suitable life insurance policy can be chosen after consultation with financial experts and advisors.

Whole life insurance and term life insurance are the two basic forms of insurance policies. With time, there have been different variations to suit the changing demands of people. A term life insurance policy is also called temporary or short-term life insurance. These are purely protection-oriented and provide death benefits only if the insured dies within the period specified in the policy. In case the insured lives past the specified duration, no money is given.

People with short-term insurance needs, like a young individual with dependents, a house loan or a car loan, favor this kind of insurance policy because they are cheap and affordable in comparison to whole life policies. In the initial years the premiums are very low; however, as the mortality risk of the insured increases with age the premium cost increases and at time becomes more than that of whole life insurance.

There are now two kinds of term life insurance, namely level term (decreasing premium) and annual renewable term (increasing premium) policies. The premiums of level term are initially higher than renewable term, but become lower in the later years. Whole life insurance has an ingrained cash value and guaranteed life protection features. The initial steep premiums of whole life insurance may exceed the actual cost of the insurance. This surplus, which is the cash value, is added to a separate account and can be used as a tax-free investment to reap dividends, and is also used to enable the insured to give a level premium latter on. There is a guarantee of getting the death benefit on the maturity of the policy or death of the insured, apart from cash value surrendered in case of cancellation.

Return of premium is popular because it combines the features of whole and term policies. It costs double the amount of a term policy. The policy is made for a set time, but full value is given on death within that period or in case the policy matures. Universal, variable and universal variables are different variations of whole life insurance policies. A universal life insurance policy offers the flexibility to the insured to choose the kind of premium payment, the death benefits and the coverage amount.

Variable life insurance policies enable the insurance buyer to invest the cash value in direct investment for a greater potential return. A universal variable insurance policy integrates the flexibility factor of a universal policy and the investment option of a variable policy. Single purchase life insurance enables a buyer to buy the policy and own it through a one-time premium payment. A survivorship or second-to-die insurance policy is a joint form of life insurance policy which is devised to serve the specific purpose of certain individuals. Apart from these, there are also endowment life insurance policies. Endowment is with profit kind or unit-liked kind. On maturity of the policy or on the death of the insured the value of the policy or the amount insured, whichever is more, is given back.

Life insurance policies differ from company to company, and hence the various parameters have to be analyzed meticulously with the help of experts and financial advisors to get the best deal.

Life Insurance Policies for Protection

Whether they are simple or complex, all insurance policies target the beneficiary’s protection. By definition, these policies are contracts which ensure the beneficiary’s financial protection in case an event which is stipulated in the contract occurs.

Being a means which ensures the beneficiary’s protection, these contracts offer them a supplementary source of income for a certain period of their life when an event which is stipulated in the contract occurs, but also in less fortunate situations such as death or invalidity. The life insurance policy intends to help the beneficiary when they need protection in case an unhappy event takes place and they need protection and all the financial help they can get.

The insurance policy offers the family a compensatory income in case the one who takes care of them dies, so that the family members are not so affected from a financial point of view after such a terrible moment. Another side of the policies is that they can be assigned. This way, if the family members have any credits they have to return to different banks, they are spared, all their debts being paid.

Another advantage of these policies is that they also protect the beneficiary if the inflation rate is very high in their country of origin. Therefore, analyzing the situations in which a life insurance policy ensures the beneficiary’s protection, we reach the conclusion that anyone can close a life insurance because, no matter of our age, gender or race, we all have to pay attention to the same dangerous occurrences, but these policies protect us.

Whether it is all about an elderly person who wants to ensure a calm and relaxed retirement for them or about a person who wants to make some savings and to get the best from their money, a life insurance is the proper answer. Of course, we don’t have to refer again to those persons who suffer death or are left invalid after some unhappy events and whose families then need all the protection they can get. All of us need to be protected either for supplementing an income or for annulling the expenses caused by an unfortunate event. We need protection to ensure our children’s education or for ensuring the safety of our business.

Nowadays, it is very important to be protected because of the advanced technology which ahs brought along a lot more risks and dangerous possibilities. Therefore, the best solution you could choose in order to protect your family is to go to an insurance company and get a life insurance, so that you can add some stability to your family, to yourself and to your own business, too. You can never know when something very bad is about to happen and you need to be prepared in all situations and for all situations. Unfortunately, we can’t always control the amount of money we have or we are about to get and therefore, it is much better to have a second plan to rely on in case something happens.