Although insurance is not an investment, it is an important part of sound personal financial management and intelligence. Insurance protection. Protect everything you worked hard to win. Protects his wife in the event of premature death. Send the kids to college. You are raising a family at a time when money shouldn’t be a concern.
You need insurance, but looking for the right coverage to protect your family and assets is like learning a new language. Lifetime, Whole Life, Whole Life, Real Cash Value, Dividends, and Loans Versus Policies – It’s a maze of insurance products, and finding the right coverage for your needs may take a bit of research.
This is a starter course on how to get the most out of life insurance and still have the protection you and your family need.
Types of life insurance
There are two basic types of life insurance with many theme variations.
Life insurance is the simplest that can be understood. It is also the cheapest protection you can buy.
Life insurance is paid for a fixed period when the insured (you) passes within a specific period, a specific period of time during which the life insurance coverage is in effect. Shelf life comes with a variety of time frames – five, ten, or thirty years are available.
The younger you are, the lower your monthly premium cost – the dollar amount you pay for protection each month. Premiums are calculated based on two factors: your age (and general health) and the amount of protection you need in dollars. It is easy. A life insurance policy for $ 100,000 won’t cost as much as $ 500,000 because you’re buying less protection.
With the term life, you keep things simple. The insurance company pays the amount of X dollars to the beneficiaries when the insured dies, as long as the policy is in force, that is, the death occurs during the term of the policy, so the name is a term for the life insurance.
Long-term life insurance policies do not stack, nor can you borrow against them, and if you choose a short period and your health changes, you may end up paying more for life insurance for a longer term than you would if you buy long-term life insurance. Long-term insurance policy – A policy that covers you for the long term.
To determine how much life you need, add in funeral costs, personal debt, mortgage debt, the possibility of tuition payments, and other major expenses that would drain a family’s resources. Determine the cost of one year to your family.
Then multiply by a factor between 5 and 10. Use the lowest factor if you don’t have a lot of debt and the highest factor if you have a mortgage and have three children for school. This is the amount of life you need to protect your family and all your expectations.
The other category of insurance is whole life insurance, also called permanent insurance, comprehensive insurance, variable comprehensive insurance, and other product names, but they all fall into the category of general coverage called comprehensive life insurance.
The first difference between term life and full life is that your entire life covers you from the day you buy the policy until your death. Of course, this assumes that you pay your life insurance premium in full each month. There is no term (valid coverage period) for life. Buy it when you’re young and your premiums will be low and you’ll start to build cash value.
This is the other big difference between long term insurance coverage and full life insurance coverage. All life is worth it. Not much, but dividends that can be used to lower monthly payments, or can be allowed to accrue interest on earnings.
Once your lifetime policy builds up enough cash value, you can borrow against that cash value to buy a home or cover some education bills. The disadvantage of taking out loans for the value of the entire life policy is that it reduces payments to the family in the event of the death of the insured.
However, the value of the lifetime policy increases while protecting your family. The cost of coverage is also higher. Expect to pay more for $ 500,000 for life than $ 500,000 for life insurance, simply because the insurance company pays interest on your monthly payments.
Calculate your coverage needs using the criteria above. Don’t think of life as a moneymaker. It is not intended to increase your wealth. This is a secondary benefit. An important side benefit, but the main reason to buy a whole life is to protect your family in case you die prematurely.
Life insurance sources
There are hundreds of insurance companies and more life insurance products, so speaking with a knowledgeable professional is a good first step.
An insurance broker can advise you, but keep in mind that each insurance broker has a “range” of products from a limited number of insurance providers, so each broker will tell you that their products have the best value.
By doing the math yourself, you’ll know when you’re in and how much coverage you want to buy, and at that point, it’s just a matter of finding a reputable insurance company that offers competitive rates and the benefits you’re looking for.
Another source is your local bank, often the best place to start looking for life insurance needs. Banks sell a wide range of life insurance products, and since insurance is not a bank’s core business, you are likely to get direct answers to your questions.
Another reason to visit an insurance representative at your bank is that your bank knows the financial matters: how much you have in the accounts, the amount of input and output monthly, your tax status and other personal financial information necessary to obtain the right type. life insurance at the right price.
Talk to your employer. Life insurance can be a benefit along with medical care and a two-week vacation, but it can also increase the amount of dollar coverage while deducting money from your paycheck without pain.
Unions, associations, the local chamber of commerce, and other organizations are also sources of low-cost or lifetime coverage. Buying life insurance coverage through an industry association, for example, gives you group rates that translate to more coverage for a lower monthly premium. On the other hand, when you buy a term or a lifetime through your union, you generally have no choice from insurance companies and this is an important point to consider.
Go with an insurance company highly rated by Standard and Poor or some other rating agency. Your broker or banker will direct you to quality coverage so you get more for your money.
Life insurance sounds complicated, but when you break it down into simple terms, it’s something you can do with a trusted advisor to get you on the right track.
Get life insurance. Get it for life if you want lower premiums; Get a lifetime value if you want your insurance to build cash value with which you can borrow.
It’s your choice. Making the right choice saves money and provides the peace of mind that only high-quality life insurance protection can provide.
Nobody likes to think about buying life insurance. It’s frustrating. Protecting your family and assets is also essential. What Kind Of Life Insurance Is Right For You? Here’s what you need to know before talking to an insurance agent or company.