Which Types Of Life Insurance Should You Choose?
Numerous people avoid getting life insurance. The reasons for this avoidance include the belief that it is not needed at this time, fear about not being able to qualify, and the extra expense associated with coverage.
While most agents will disagree, the truth is that there are times in your life when you probably do not need it. Keep in mind that these times are few, relative to the times when it is important for the financial peace of mind for your family.
The many options available can make your head spin, and not all choices are easily understandable by the average person out there. Don't worry: All the different plans can be demystified. Your agent can be a great resource. Following is basic information you need to know:
Straight life insurance, also known as whole life or permanent, is set for life when you purchase the policy as is the death benefit. In general, the younger and healthier you are when you purchase the policy, the lower your premiums for the remainder of your life.
As long as you pay the premium, your beneficiary will receive the proceeds when you die. Straight life policies build up cash values that you can borrow or withdraw if needed, but this will reduce the amount that will be paid to your heirs, if it is not paid back.
Annuities are a type of coverage that not only has a death benefit, but also a life benefit. It can create a stream of income for you while you are still alive. There are several types of annuities, but there are two basic types; fixed and variable.
A fixed annuity pays a fixed yield and has pre-determined payout to you while still alive depending on the date that you annuitize the policy and how many years the insurance company estimates you will live to collect those payments. You also can elect to pay a fixed payment monthly in exchange for a fixed monthly benefit for a specified period of time.
A variable annuity functions the same way, but can potentially pay much better benefits. Your premiums are invested in the stock market so they have the potential to earn or lose money. Your actual monthly payout, should you decide to annuitize depends on your success with your investments. There are also other options available with annuities, but you should talk with an agent for more details. Discuss with them about whether or not this is a good option for you.
Perhaps the most popular is term life which is the easiest to understand and is the most economical. Term life is for a specific term (example 10 years), and will pay to your heirs only if you die during the term of the coverage.
Young families can purchase a high amount of coverage relatively inexpensively to ensure that young children will be cared for in the case of the death of one of the partners. Term life does not build cash value.
Burial insurance is self explanatory. It is meant to pay funeral expenses.
Mortgage life is like a term policy but more expensive. The purpose is to pay off the mortgage in case of the passing of one of the borrowers of the mortgage. The value declines at about the same rate as the mortgage balance declines. Inexpensive term insurance, which retains a consistent life amount through the term of the policy, is a better value.
For more detailed information about what type of policy would be best for your situation, it is always advised that you do your own research, and of course, check with an agent who can address your concerns.
While most agents will disagree, the truth is that there are times in your life when you probably do not need it. Keep in mind that these times are few, relative to the times when it is important for the financial peace of mind for your family.
The many options available can make your head spin, and not all choices are easily understandable by the average person out there. Don't worry: All the different plans can be demystified. Your agent can be a great resource. Following is basic information you need to know:
Straight life insurance, also known as whole life or permanent, is set for life when you purchase the policy as is the death benefit. In general, the younger and healthier you are when you purchase the policy, the lower your premiums for the remainder of your life.
As long as you pay the premium, your beneficiary will receive the proceeds when you die. Straight life policies build up cash values that you can borrow or withdraw if needed, but this will reduce the amount that will be paid to your heirs, if it is not paid back.
Annuities are a type of coverage that not only has a death benefit, but also a life benefit. It can create a stream of income for you while you are still alive. There are several types of annuities, but there are two basic types; fixed and variable.
A fixed annuity pays a fixed yield and has pre-determined payout to you while still alive depending on the date that you annuitize the policy and how many years the insurance company estimates you will live to collect those payments. You also can elect to pay a fixed payment monthly in exchange for a fixed monthly benefit for a specified period of time.
A variable annuity functions the same way, but can potentially pay much better benefits. Your premiums are invested in the stock market so they have the potential to earn or lose money. Your actual monthly payout, should you decide to annuitize depends on your success with your investments. There are also other options available with annuities, but you should talk with an agent for more details. Discuss with them about whether or not this is a good option for you.
Perhaps the most popular is term life which is the easiest to understand and is the most economical. Term life is for a specific term (example 10 years), and will pay to your heirs only if you die during the term of the coverage.
Young families can purchase a high amount of coverage relatively inexpensively to ensure that young children will be cared for in the case of the death of one of the partners. Term life does not build cash value.
Burial insurance is self explanatory. It is meant to pay funeral expenses.
Mortgage life is like a term policy but more expensive. The purpose is to pay off the mortgage in case of the passing of one of the borrowers of the mortgage. The value declines at about the same rate as the mortgage balance declines. Inexpensive term insurance, which retains a consistent life amount through the term of the policy, is a better value.
For more detailed information about what type of policy would be best for your situation, it is always advised that you do your own research, and of course, check with an agent who can address your concerns.
About the Author:
In the San Francisco Bay area, call on Stoneridge Financial for advice and assistance with life insurance and other insurance related investment products. Powered by SEO 2.0 Services