Best Life Insurance Blog

When it comes to a making big decision like choosing a life insurance policy, not only do you want the peace of mind knowing that you and your family will be protected, but you also want the peace of mind knowing that you made the right selection.  However, with the number of options you have available for life insurance policies, it can be a bit overwhelming and you might not know where to start.  Ask yourself the following questions that will assist in your quest for picking a plan that is right for you:

#1:  Do you need life insurance? Before dishing out the dough on a life insurance policy, it is crucial to determine whether or not it is essential for your lifestyle.  Life insurance needs vary from person to person, so you must evaluate your own circumstances and make a decision accordingly.

• Yes: If your family is relying on your salary for survival and it is important to take care of your loved ones, life insurance is a good option for covering financial obligations in case of your death.
• No: If you don’t have any dependents or aren’t responsible for raking in a large percentage of your family’s earnings, most likely you could do without life insurance.

#2:  How much life insurance do you need? This is another question that has an answer dependent upon different factors in your life.  The general guideline is an amount between five and ten times your annual salary.  Other important factors to consider when figuring how much life insurance you need are:

• Sources of income
• Number of dependents
• Debts you’ve incurred
• The lifestyle led by you and your family

#3:  What are the different types of life insurance? Once you’ve outlined your own personal situation and specific needs in a life insurance policy, carefully review the three main types and be sure to shop around for competitive deals:

Whole life insurance: This is a permanent policy that protects you for your entire life as long as set premiums are paid each year.  Whole life insurance policies also provide you with a cash reserve that is built up over time.

• Pros: Provided that you make good on your premiums, whole life insurance is permanent.  Along with permanency, these policies build up a savings account called a “cash value” that grows tax-deferred.  Whole life is also a great estate planning tool that can help pay taxes if you expect your estate to bear a heavy tax burden.
• Cons: Whole life insurance policies tend to be marked with a significant price tag that not everyone is able to afford.  Other than being expensive, another downfall is that you are not allowed to choose separate investment accounts—the insurance company controls how and where your premiums are invested, giving you no flexibility.  The plan you buy today remains fixed for life.

Term life insurance: This type of policy provides coverage at a fixed rate of payment for a limited period of time.  After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or obtain further coverage with different payments and conditions.

• Pros:  One of the best selling points for term policies is that they are the most affordable variety of life insurance.  The reasonable rates allow purchasers the chance to obtain policies with larger values than what they would be able to afford otherwise.   Other than being inexpensive, these policies also boast the benefit of being easy to obtain without some of the hassle associated with other types of policies.
• Cons:  One of the biggest issues with term policies is the fact that they expire.  If you reach the end of a term and you still need life insurance, you will be starting from scratch and it will be more difficult to obtain another policy.  Also, if you outlive your policy or decide to cancel, you get nothing back which can make you feel like you are wasting your money.

Universal Life Insurance: This flexible type of insurance is permanent and based on cash value.  Similar to whole life insurance, universal life offers low-cost protection along with a savings element that is invested to provide a cash value buildup (but you can review and alter your policy as needed).

• Pros: These policies are desirable because of their flexibility which allows you to adjust the death benefit as your needs fluctuate.  Depending on your financial circumstances, you also have the flexibility to pay smaller or larger premiums.
• Cons: There is the chance of losing protection and your policy lapsing if you are continually paying premium payments that are too small.  You also face the risk of decreased interest returns on the cash value of the policy if the insurance company does poorly with its investments.

Selecting the right life insurance policy may seem like a daunting task, but with these simple guidelines you will be on your way to choosing the best one to protect you and your family.  Educate yourself, shop around and discuss your options with a broker.

Ellie Stevens, guest post author, shares with us this article about finding the right life insurance policy.  Ellie also writes on topics that cover the issues seniors face in the world of online dating for Best Senior Dating Sites.