Life Insurance Quotes and Coverage Explored- What You Need to Know
2009-11-04
Life insurance, unbeknownst to most people, is one of the simplest types of insurance to buy. You simply fill in your personal information, choose the amount of life insurance coverage that you want (up to the millions of dollars in some cases), and pay the monthly premiums based on the coverage that you get. Of course, you do have to choose between term life insurance and whole life insurance and make sure that you choose a good insurance company, but it’s still simpler than getting many other types of insurance that you might need in your life.
Term life insurance is protection that is given for a term of one year or more. Usually it is in increments of five or ten, and can last up to 20 or even 30 years if you so choose. This coverage is usually the cheapest, but the premiums will increase with age.
Whole life insurance is the most common type of insurance that people buy. This insurance is often bought as an investment, since the policy accumulates a cash value in addition to the death benefit over time. That means that people can have access to extra money when they need it without impacting their actual death benefit. Plus, this insurance has level premiums throughout your life.
As you can see, term life insurance might have lower rates in the beginning, but they will increase over time and there will be no accrual of cash value. With whole life insurance, the rates will be higher at first but remain the same over time, often becoming cheaper than term insurance in the end. Plus, cash value will be accrued over time which makes it a much better investment for many people. Ultimately, it is up to you as to which type of life insurance you choose, but whole life insurance is generally the better investment. Keep in mind that the coverage amount that you pick will have to be enough to take care of your final expenses and allow your family the financial security and peace of mind that they deserve after your death.
For example:
If you have an annual salary of $65,000 and your funeral expenses are planned to cost about $15,000, you will want to make sure that you have AT LEAST $80,000 in life insurance coverage. This gives the family enough money to pay the final expenses, pay off any debts that remain outstanding, and gives them time to adjust to having one less income in the household.