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The Simple Facts About Life Insurance

Every law-abiding American citizen has car insurance, and most people have some form of medical insurance.  But how many people can say that they have life insurance?  The simple truth is that most people do not even know what to look for in a good life insurance plan; so they either choose one that does not fit their needs, or they avoid owning one altogether.  Now, thanks to the Internet, information on every type of life insurance plan is available to the seeker – and pretty confusing.  Simply understanding the basics about life insurance and its purpose may help you to choose the plan that is best for you. 

Is Life Insurance Right for Me?

Many people benefit from investing in a solid life insurance plan, but life insurance may not be the best investment for your situation.  The purpose of life insurance is to provide for someone upon your death – your spouse, your children, or your employees.  If you cannot think of anyone who is dependent on your assets, then life insurance may not be right for you.

However, most people have someone they would like to protect after they die.  Deciding who you need to protect and how much you need to provide for them will play significant roles in your decision process as you choose the policy that is best for you.  As your life situation changes, you may also want a life insurance policy that will change with your needs.  When your children were younger, you may have wanted a plan that would protect them if you were to pass away before they were grown.  Now you may find yourself in the “empty nest” years, no longer responsible to provide for your grown children.  Knowing your policy will save you money from unnecessary pay-outs.      

What Kind of Life Insurance is Available?

Four different types of life insurance exist, but you must find the one that is right for you.  Evaluate your current financial situation, decide who will benefit from your policy, and determine whether you need something temporary or permanent.  Before choosing your policy, make sure you do your research.

Term insurance is the most affordable of the plans, but it is also temporary.  Many companies promise a certain rate to get you to sign a contract with them, but they may stipulate that they can change the rate once your policy has reached a certain timeframe (sometimes as soon as a year, but usually at 10 years).

Whole life insurance provides benefits for the entire life of the policyholder, but it is definitely more expensive than Term insurance.  If the policyholder chooses to cancel the policy at any time, he will receive a cash value, which is the available amount if you surrender a policy before maturity or death."  This amount is different than the face value, which is what the benefactors would receive at the time of the policyholder’s death.

Universal life insurance allows more of an investment, since the death benefits are separated from the investment portion.  This plan actually allows the policyholder to determine his own premiums and death benefits as his budget changes. 

Variable life insurance relies on the policyholder to make a sound investment to determine the death benefits.  Most companies will cover some portion of the death benefits if the policyholder chooses poorly in investing, but you must decide for yourself if you are willing to take that risk.   

Where Do I Start?

Once you have determined whether life insurance is right for you and which plan will best meet your needs, you will need to find a company that is best for your situation.  According to http://www.bankrate.com, “approximately 90 percent of life insurance is sold at the kitchen table,” and seven to 10 percent is sold over the Internet (http://www.bankrate.com/finance/insurance/just-the-facts-on-life-insurance-1.aspx). 

Before signing a contract with any company, research their rates and policies.  Know what you want in your own basic plan, so you will not be led into signing a policy that is more than you need.  By educating yourself, you can feel secure in investing in a life insurance policy that will provide for those who depend on you.

 

Americans Perception of Life Insurance