www.newyorklife.comDO I NEED LIFE INSURANCE
A life insurance policy is a contract with an insurance company. In exchange for premium payments, the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries upon the insured’s death. Many life insurance plans combine financial protection against personal tragedy and lifelong investment returns into a single strategy. But whether you’re trying to create peace of mind for the future of your family or preparing for retirement, you need to compare life insurance plans to make sure you have the right strategy for your situation. Of all the things you can protect, nothing is more important to protect than your own life. Life is full of unexpected situations and events, so it pays to be prepared for anything.
Here’s a brief rundown of the pros and cons for the most common types of life insurance.
- Term Life Insurance
it serves the sole function of protecting loved ones in the event of your death or serious injury or illness. These life insurance plans have a set term after which the policy expires. The best plans often establish a term length that coincides with a planned retirement age at which point financial protection is no longer needed.
- Whole Life Insurance
This is a permanent form of life insurance that protects your loved ones from financial hardship while accruing cash value toward your retirement savings or as a safety net in case of hardship. Premiums are set at the beginning of the plan and are generally much higher than in the case of term life insurance. This type of life insurance policy creates the strongest form of guaranteed and ongoing protection, albeit at higher premium costs and with an inferior return on investment.
- Universal Life Insurance
You can buy universal life insurance with a large, one-time premium paid at the beginning of the policy, or you can make variable premium payments within a certain range. Universal life insurance is a relatively new type of life insurance that was devised to eliminate some of the common criticisms of whole life insurance –primarily inflexible premiums and poor investment returns
Advantages
One of the biggest advantages of term insurance is its lower initial cost in comparison to permanent insurance. Why is it cheaper when initially purchased? Because with term insurance, you’re generally just paying for the death benefit, the lump sum payment your beneficiaries will receive if you die during the term of the policy. With most permanent policies, your premiums help fund the death benefit and can accumulate cash value.
Term insurance is often a good choice for people in their family-formation years, especially if they’re on a tight budget, because it allows them to buy high levels of coverage when the need for protection is often greatest. Term insurance is also a good option for covering needs that will disappear in time. For instance, if paying for college is a major financial concern but you’re pretty sure that you won’t need life insurance coverage after the kids graduate, than it might make sense to buy a term policy that’ll get you through the college years.
When the Term Ends
But what happens if you buy a term policy only to realize at the end of the term that you still have a need for life insurance? Well, it’s sort of a good news, bad news story. The good news is that many policies will give you the option to renew your policy when you reach the end of the term. The bad news is that you’ll probably face much higher costs since age is one of key factors used to determine life insurance premiums. To renew the policy, you also may have to present evidence of insurability (that’s insurance jargon meaning, “take another medical exam and answer a new round of questions about your lifestyle, health status and family health history”). If you’re still a fine specimen with healthy living habits, you might re-qualify at a reasonable rate. But if your health has deteriorated, you may find that it’s too expensive to renew your policy or you may not even re-qualify.
So if you’re considering a term policy, make sure you carefully consider how long you’ll need the coverage. If you’re pretty sure that your needs are temporary, then term insurance is probably the right choice for you. But if you think there’s a possibility that you might need the coverage for a long time, then remember that if you want to renew your term policy after it expires or buy a new term policy at that time, your age, health status or other factors may make coverage very expensive.
To better understand term insurance, consider this analogy. When you purchase term insurance, it’s sort of like renting a house. When you rent, you get the full and immediate use of the house and all that goes with it, but only for as long as you continue paying rent. As soon as your lease expires, you must leave. Even if you rented the house for 30 years, you have no “equity” or value that belongs to you.
Now we can compare some of best life insurance policies being offered which can help you and your family leave a stressless life:
| INSURANCE PROVIDER | POLICY TYPES | SMART RATING | FEATURES |
| STATE FARM |
|
99 |
|
| MUTUAL OF OMAHA |
|
92 |
|
| GERBER LIFE |
|
91 |
|
To compare life insurance is to shop for life insurance: Unless you already have extensive knowledge of various life insurance policies, you should consider several different plans. The fastest and most reliable way to compare life insurance plans is to get multiple quotes from an online referral services.. Not only will you be able to compare life insurance quotes from several different, reputable companies, but you’ll be able to do so from the comfort of your own home and at your own pace so you can take however much time you need to feel confident about your decision.
