Life insurance is not a very fun thing to think about. When you think about life insurance and what it actually means, you are paying for a policy that will pay out money in the event that you die. It is sort of a morbid concept when you think about it. The key takeaway though is that a life insurance policy can make it easier for you to rest easy, knowing that your family will be well taken care of in the event that something terrible actually happens to you.
So do you need life insurance? Whether or not you need life insurance most likely depends on your personal situation. If you have no dependents, you most likely do not need life insurance. If, however, you are someone who has a family with a wife or husband, children, and so on, you may seriously want to consider it. Here are some tips on the types of life insurance available.
- The first type of life insurance that we will talk about is known as term life insurance. Term life insurance is basically a death benefit that has no cash value. If you have term life insurance, you will end up with payments being made out to your dependents on your behalf in the event that you pass away during the effective period of the policy. Term life insurance and the proceeds associated with it only come into play at the time of your death.
- Whole life insurance is a bit different from term life insurance. The big difference here is that with whole life insurance, it is more of a traditional life insurance policy. Over the entire life of the whole life insurance policy, you will pay a flat premium, which will be effective until your death. Once you pay the premium amount on the policy, you will pay into the policy and build up a cash value. When you actually pass away, there will be both a death benefit as well as a cash value benefit that will be paid out. Whole life insurance can be more expensive, but it can also mean your dependents are in a more comfortable position.
- Variable life insurance is different from the others and is also the life insurance policy that comes with it the highest costs out of all of the different types of policies. With a variable life insurance policy, you are paying in money in the form of your premium that builds up a cash reserve. With this cash reserve, you basically invest money that will either build up and grow at a percentage rate of return over time, or decrease depending on the performance of the investments. This can be risky, as you can lose money on the policy just as fast as you actually take in money.
- A universal life insurance policy is always a good option as it is a mix between term life and whole life. The administrative fees that go along with this type of policy are higher than the others. The real benefit here is through the flexibility that comes with it, as you can vary the amount of your payment that goes to your premium and to your actual cash buildup.
- When thinking about which policy to buy, you need to consider your situation, your health, and what you want your dependents to get out of the policy in the end.
- When thinking about the costs of a life insurance policy, if you are a healthy 30 year-old man, a life insurance policy will cost around $300 or so per year for term life insurance.
- Life insurance can be a very intelligent investment to save money in the event that you cannot care for your family.
Life insurance policies are very powerful tools that can be used in intelligent manners to help those that it protects and benefits.
Author Bio: This article was written by Larry Smith of Obares.com an informational website that provides great articles on loans and real estate.