Whole Life and Term Life Insurance
The basic premise of life insurance has not changed over the years. Although the choices now available have multiplied, the purpose is to provide financial stability for your dependents if you should die. Life insurance is an important purchase and whether you are insuring yourself or your entire family, the decision to buy life insurance provides both protection and peace of mind.
The sheer number and variety of life insurance options can make consumers want to pull their hair out. The insurance market is continually expanding and changing but an organized approach to choosing insurance will work for you.
Simplify the Life Insurance Buying Process
Walking through the system of steps listed below will help guide you through the maze of buying life insurance and make it possible for you to attain the goal of financially protecting your loved ones.
Step 1: Do I really need life insurance?
The need for life insurance is created the moment you have someone depending on your for financial support. This may be when you marry or at the birth of your first child.
The variety of options to choose from may deter some people from buying coverage when they need it. Insurance can be frustrating and complex and reading policies can lead to confusion and anxiety about whether you can afford the coverage you need.
Term Life and Whole Life insurance are the most common type of policies and are based on simple and straightforward concepts.
Term Life Insurance is sold in time limited policies. You may opt for a term of one year or choose a term up to 30 years. This life insurance provides a death benefit that is the face value of the policy and does not result in any cash value. When the term of the policy is reached, you may be able to renew a term life policy but premiums will increase. If you feel renewal will be required you might opt for slightly higher premiums and choose a guaranteed renewal term life policy which guarantees premiums will remain constant.
Whole Life Insurance protects you through your entire life. The premiums paid for whole life policies are substantially higher than for term life insurance. Added to the death benefit, whole life insurance adds a savings component that allows the policy to build cash value with time. That cash value may be withdrawn or applied to premium payments. It may also be useful as collateral to borrow against. Any money withdrawn from your policy will carry high interest payments so you will pay to interest to borrow money from yourself.
Step 2: What type of policy should I buy?
Whole life and term life insurance are the basic life insurance policies and other types are variations of the two. You may buy insurance with premiums that remain the same or change over time. This requires you to decide how much you can spend to find Miami life insurance that fits your budget.
It is important to remember a couple things:
- Your needs may not be the same in a year or more as they are right now. Your financial outlook may change or your income may go up or down. You may add a new member to your family or take on a large mortgage. The changes in your life and your budget may lead to a change in the life insurance you need.
- It’s a mistake to delay purchasing life insurance because you can’t afford the whole life policy you’ve chosen. You may have good reasons for deciding on a whole life policy but if you can’t afford those premiums you lack any insurance protection while you wait for finances to improve. Buying a term life policy for now will provide protection for you and your family and be far less expensive than the whole policy you prefer. In a few months or a year you can add a whole life insurance plan when you are in a position to afford the higher premiums. The younger you are when you buy life insurance, the lower the premiums will be.
It may seem daunting to decide how much life insurance coverage you need and a life insurance calculator found on many life insurance company sites is a useful tool. The calculator will help you determine the most important aspects of your financial life by including your assets and liabilities to arrive at your net worth. It will help in estimating large future expenses such as the costs of higher education and burial costs and provide you with a good idea of how much insurance coverage you need to buy. One excellent example of an interactive tool that provides a capital needs analysis can be found at MSN Money .
Step 3: Review your policy regularly!
Your life does not stay the same. The years bring changes in the number of people dependent on you for support, your lifestyle changes as your career advances and your income changes. That life insurance policy so carefully chosen a few years ago may no longer provide adequate protection for your family. If that policy is tucked away in a drawer, pull it out at least once a year and dust it off.
Your life insurance agent will be happy to help you review your current policy to see if adjustments are necessary. This will help you identify areas where you may be over insured as well as those where more insurance coverage is indicated to protect the current lifestyle of your family.
The sooner you make the decision to purchase Miami life insurance; the better off you will be going forward. The best premiums are offered to those who are young and healthy and those lower premiums can benefit you and your budget for years to come. The time to add life insurance protection for yourself and your family is now!
Learn how easy it is to shop online for life insurance. Get your free Miami life insurance quotes today!
