"Affordable Life Insurance." What Does This Mean To You?

Life insurance can mean safety for your family and business in the event of your death. For others it conjures up images of pushy salesmen and confusion about what they are buying.

Insurance Egghead to the rescue! I'll help you protect this little guy to the right.

To achieve peace of mind and satisfaction, learn about the different life insurance policies available when you're looking for an affordable life insurance. The more information you have, the more options you will have as well.

By the time that you are done with this article, you will be armed to slay that dreaded beast... the life insurance agent!

There are three categories of policy available. Here is a brief explanation of what they mean:

Whole Life Insurance

A permanent option is whole life insurance. If you continue to make regular premium payments, the policy will have lifelong effectiveness for you.

The payments on a term life policy will be lower than those for a whole life one, because the latter's costs are averaged across the entire life of the policyholder. There are, however, no increases with renewal, because whole life policies never need to be renewed! There is no change in whole-life policy premium, no matter how great an age the policyholder is fortunate to reach!

In some policies a savings option can be added which can be used to borrow against. However, borrowing against your life insurance policy should only be done as a last resort as you do not get out as much as you put in.

Universal Life Insurance

Universal life insurance is another permanent form of life insurance. The policy remains effective until the death of the holder at which point the policy is paid out to the beneficiaries. You never need to renew the policy (regardless of health) and the premiums will never go up as long as you continue to make payments.

This form of life insurance also incorporates other financial services including a savings plan that can be made in addition to the policy. Otherwise the policy can be surrendered in exchange for the savings that have accumulated. If desired, policy owners can opt to add more people to the policy, manage their own investments, or even use accumulated savings to pay premiums.

These options come with a cost: universal life insurance is more expensive than either whole life or term life insurance.

Term Life Insurance

In comparison to the others, term life is the least expensive. You can select a period of time (a term) for term insurance; e.g. 1, 5, 10, or 20 years.

Term insurance is a good choice for young families with dependants and high debts (such as a mortgage) that they will be no longer be responsible for in 15 to 20 years when the policy ends. There's no cash value to a term policy, so it cannot be borrowed against or exchanged for cash. If the policy ends and the individual wants to renew the policy the cost of premiums will be higher.

Using term insurance to cover the basic financial requirements of an individual while also instituting a separate savings plan may reduce the need for insurance later in life and will give you a much more affordable life insurance. Although you sacrifice long term protection.

Life Insurance Policy Riders

If the need exists, certain policies allow their owner to purchase other options.

You may hear the term 'riders' used to denote these options. Some riders allow loans or cash payouts; others include AD&D (Accidental Death and Dismemberment), A&S (Accident and Sickness), insurance for disability income, and the addition of a spouse.

The best way to get an affordable life insurance is to find an insurance broker; they can help you grasp the benefits of different features and make recommendations that will meet your personal needs. With the understanding you'll gain, you'll be able to choose wisely, conserving your hard-earned cash and ensuring that your family or business is properly secured.

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