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Life insurance is something that should be considered as early as possible in order to take advantage of lower rates. No matter what age you are, though, if you don’t have life insurance it is something you need to think about buying. You can buy the best policy by making an educated decision and you can get the best rates when you compare life insurance products.

The type of life insurance policy you buy will depend on a number of factors. Your age, your financial status, your budget, and your health will all play a role in helping you determine what kind of life insurance makes the most sense for you and your family.

You mainly have two options: whole life insurance and term life insurance. Within those two options there are different types of life insurance as well, but your first decision is if you want a lifelong policy or if you want a short term policy.

Another consideration that is indirectly related to life insurance is annuities. Annuities are not a type of life insurance, but they usually come into play when someone is buying life insurance. An annuity is income retirement that can have an impact on your life insurance decision.

Understanding Whole Life Insurance

Whole life insurance is basically life insurance that you buy for your entire life. It can be purchased at almost any age and the policy lasts as long as you do. The younger you are when you buy whole life insurance the cheaper the policy will be.

Many people debate if life insurance is necessary for a child. Since life insurance is really only intended to provide financial support for your dependents, a child does not truly need life insurance. However, buying life insurance for a child can be a nice investment for your child because he will never be able to buy his own life insurance for that low of a rate.

For example, you can buy life insurance for a 3-year-old for less than $4 per month. That rate is locked in for life, so even at age 70 your grown child will only be paying $4 per month for that insurance. If he waits to buy life insurance until he is 40, he can expect to pay more than $40 per month for that same insurance, which is a huge difference.

The biggest benefit of whole life insurance is that you have coverage no matter when you die. The biggest disadvantage is the cost of whole life insurance. Monthly premiums can be expensive and over the course of a lifetime the premiums on your insurance policy can add up substantially.

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Understanding Term Life Insurance

Term life insurance is also very simple to understand. At its most basic level it is a life insurance policy that is only good for a set amount of time before it expires. Terms are typically 10 years, 20 years, or 30 years.

For example, if you have a 20 year term life insurance policy, then that policy is good for 20 years, starting the day you buy the policy and expiring 20 years thereafter. If you die during the 20 years that the policy is in effect, then your beneficiaries will claim your death benefit.

If you do not die during that term, then your policy terminates. This means that there is no benefit payout, your premiums are not refunded, and you no longer have insurance for the remainder of your life.

With this type of life insurance policy, there are some obvious disadvantages. The main disadvantage is the loss of premiums if you do not die during your policy’s term. Of course, the benefit to that is that you are still living!

Some insurance policies allow you to convert a term life insurance policy to a whole life insurance policy once the term life policy expires. This can be costly but it can also be advantageous over being without any insurance or buying a brand new life insurance policy.

The big advantage of term life insurance over whole life insurance is that the cost of the premiums tends to be cheaper on a month to month basis. If you only need coverage for a certain length of time, such as to care for your dependents should you die at an early age, then this type of life insurance may make the most economical sense for you.

How much money you have saved for the future and how much money you can afford for your life insurance premiums may make the ultimate decision for you as to which life insurance policy to buy. You can also plan on adding an annuity to your investment portfolio for your retirement and weigh that into your calculations as well.

The Difference between Annuities and Life Insurance

Annuities are not a type of life insurance policy. They are basically used to buy retirement insurance. When you buy an annuity, you are buying future income. Annuities are intended to give you money on a monthly basis so that you can sustain financially during your retirement.

Unlike a life insurance policy, most annuities do not pay anything out to any beneficiaries. This means that if you buy an annuity and you die 10 years into your retirement, any premiums or investment earnings in your annuity that still remain after you die default to the insurance company. Your beneficiaries will most likely not receive any cash benefit.

Therefore, an annuity does not work as a life insurance policy and cannot be considered part of your estate planning for your heirs. You must use an annuity only for income planning and not as a planned death benefit for your dependents.

For example, if you spend $200,000 on an annuity, be aware that unless your policy allows you to select beneficiaries to continue to receive your monthly income for some time after your death, your $200,000 is spent. You will either collect it yourself during the course of your retirement or your insurance company will keep it.

In order to leave money for your heirs, you need to have solid investments that your beneficiaries can actually claim. A life insurance policy ensures that the money is there when the time actually comes and for the time when your family needs it.

When you compare life insurance, you need to consider how much money you can afford to save and how much money you have to spend. You need to buy the best coverage for your family without going broke to get there. The insurance quote tools on this website are designed to provide you with no cost obligation rates so you can get started planning your life insurance now.

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