Articles Search Engine

Almost everybody who has some bit of common sense and a family to take care of should buy a life insurance policy. However, some find them to be unaffordable and so in spite of their best intention, they live either uncovered or with inadequate coverage. When such a person dies prematurely, his family is forced not only to lead a frugal life, but also to give up all their dreams. Unfortunately, a situation such as this arises only because very few people are aware of the low cost term life insurance policies. Such policies offer a very large benefit at a very low rate, especially if the policy is acquired while one is still young, healthy and without tobacco use.

One should know that today we have different types of life insurance policies to meet our varied need. It is true that the most common policies are whole life policies with a saving component included in the package. However, in comparison to term life, all such policies are quite overpriced. If you want the coverage at affordable rate, you have to opt for the term life; and as I said, you have to do that while you are still young and healthy.

However, if you put whole life vs term insurance, the whole life policies, in spite of their higher rates, may come out a real winner. This is because:

• The term life policies are sold only for a stipulated period and the death benefit is paid only if the insured dies within the stipulated term while the death benefit in a whole life policy is payable whenever the death takes place provided the policy has been kept valid with regular payment of premiums.

• Moreover, the term life policies are pure life insurance policies and hence they do not offer any investment opportunity. Consequently, if the insured outlives the term, he does not get any return out of the money he had paid. A whole life policy on the other hand can be cashed out once the need for insurance is over and consequently, even if you outlive the policy, you have a tidy sum at hand.

Now, let us see how much valid these points are! Remember what I said, “Once the need for insurance is over”! It goes to prove, you do not need life coverage forever and hence the temporary validity of a term life policy is not an issue at all. If you have any financial wisdom, you will not need the coverage for more than thirty years. If you need it for less, the term life gives you the option to buy it accordingly and pay at an even lower rate.

Indeed, if you look for term life insurance quotes, you will find that these policies are sold for 1/5/10/15/20/25/30 years. It is for you to determine your need and buy the policy accordingly. But how do you do that? The answer is simple. A term life is a pure death benefit and so its primary job is to replace the income earned by the insured while he was still alive. Therefore, you need the coverage only as long you have an income to replace and an insurable interest to cover.

Consider factors such as your retirement age, your children’s age and your other liabilities, how long before you think you can build up enough assets for self-insurance etc. while deciding on the coverage term and then add a few years for any contingency. If you are successful in your endeavor, the temporary validity of the policy will not be any issue at all.

That the term life policies offer no return in case you outlive the term is not an issue either. Yes, the whole life policies combine death benefits with cash value that is reinvested and tax deferred, but they can do that only because you pay extra for it. A compare of life insurance quotes will tell you how much. What is more, because these policies are permanent, any early termination of the contract is always subject to penalties. Therefore, if you cash out the policy while you are still alive, you will never get full value of your policy.

For insurance purpose, it is always better to opt for term life and invest separately for self-insurance. However, if you want that at reasonable rate, always avoid the no medical life insurance policies. Because these policies are sold without verification of your actual health condition, they are priced to cover all sorts of possibilities. However, on the pro side if you want immediate coverage or have some peculiar health or lifestyle problem, these polices may be the only option you have. Talk to your broker about it too.