What Is The Best Life Insurance Policy?
If you’re just starting to look into life insurance or you’re reviewing your life insurance portfolio, the myriad of choices can be confusing.
Man is Mortal. That makes life insurance a little unique and interesting, doesn’t it? We purchase things like health insurance, car insurance and home insurance, then hope we never have a need to use them. Life insurance is different, because it’s a widely accepted fact that sooner or later, each one of us will die.
So many choices. When it comes to life insurance, there are many options. What is the best life insurance policy? You may have heard terms like “whole life insurance”, “term insurance” or “variable insurance” … but what does it all mean? And what are the differences? Well, first let me point out what they have in common: all life insurance policies provide payment to a beneficiary in the event of your death. Except for that basic tenet, the differences between policies can be major. In this post I will discuss the basics of the different types of life insurance. In future post I will go into detail of each type of life insurance and go through the options and the pros and cons of each.
Whole life insurance. This type of insurance covers your entire life (not just a portion or a “term” of it). It is considered permanent life insurance which is used to cover you for your “whole life.” Whole life insurance policies tend to cost more than “term” policies. This is both because they grow what is known as “cash value”, and because after a time you will be able to borrow against or withdraw from your whole life benefits to supplement your retirement. Most whole life insurance policies will have guarantees on both the cash value and death benefits.
Term life insurance. Rather than covering your whole life, “term” insurance covers a pre-determined portion of your life. Common terms are ten, twenty and thirty years, if you die within that term, your beneficiaries receive a death benefit. If not, generally you get nothing. To put it simply, term life insurance allows you to purchase more coverage for less money. Basically, you are betting on the probability of your death occurring within that specified “term”.
Variable life insurance. Variable life insurance is a permanent insurance. However, unlike whole life insurance, variable insurance allows you to invest the cash value of your policy in “subaccounts” (which can include money market funds, bonds or stocks). Variable insurance offers a bit of control, as the value and benefit depend upon the performance of the subaccounts you select. However, that means there could be significant risk involved, since the performance of your subaccounts cannot be guaranteed.
Universal life insurance. With universal life insurance, it all comes down to flexibility. It is permanent life insurance that provides access to cash values that build up tax-deferred. You can choose the amount of coverage you feel is appropriate, and you retain the ability to increase or decrease that amount as needs change (subject to minimums and requirements). You also have some flexibility in determining how much of your premium goes towards insurance, and how much is used within the policy’s savings element.
So, which is right for you? Many factors come into play when deciding what type of life insurance will best suit your needs. The best thing to do is to get a quote or review your current policies using The LIFE Study. It is very quick and easy, click here and let us assist you in looking at all the factors and help you to find the right life insurance policy at the right price for your specific needs.
How Much Does Life Insurance Cost?
What a question, “How much does life insurance cost?”
I am asked this question on a daily basis. There are many variables that make up the cost (or premium) of a life insurance policy. They include the amount of coverage you are seeking, the length of time you want the coverage to last, your overall health, family history and age and whether you are a tobacco user. There are some variables that are just as important but most people are not aware of them which includes your occupation, if you are involved in any dangerous activities such as a private pilot or hang gliding or mountain climbing… this list can be rather long. Your financial net worth and annual income is also taken into consideration when the insurance company is deciding on what premium to offer you.
The most important component of the premium, however, is the purpose for purchasing the policy in the first place. Are you looking for maximum coverage in the event of premature death (I have always wondered how many deaths were right on schedule) to take care of your family or are you looking for cash accumulation in addition to the death benefit to give you a tax-free retirement income? Are guarantees important to you? Are you funding an Irrevocable Life Insurance Trust, or do you just want your mortgage paid off?
In addition, have you looked at the financial strength of the life insurance company? If you purchased a policy through an internet term quoting machine or didn’t consider all of the above factors, you may not have the right policy. Or you might be able to improve on the policy you already own. Let me tell you a dirty little secret about most online life insurance quoting websites. These sites want you to think that they can answer the question of “what is the average price of life insurance?” In reality, what some of them are doing is selling your information to any insurance agent, and I mean any agent, that will buy your information. These insurance agents may be less experienced or unaware of all of the factors involved in determining the best life insurance policy for you.
One last thing to be aware of- insurance companies will have as many as eight different rate classes and an additional ten substandard rate classes. I find that most people that were quoted a life insurance premium without all of the facts were misquoted by as much as three to five rate classes. It is very important that all of your personal factors are taken into consideration when preparing a life insurance quote. That is why a quote or a review using The LIFE Study is the preferred method in helping you to find the best life insurance policy for you and your family.
“Click here” to get started with your free insurance review or life insurance quote.