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Life Insurance or Term Life Insurance

Saturday, January 30th, 2010

life insurance 6Understanding the basic kinds of insurance products available out there can reduce some of that anxiety. How can you tell whether you should go with term life insurance or whole life insurance? Term life insurance generally has the lower monthly premiums of the two. You purchase term life insurance to cover you until the kids grow up or until retirement or for another specified time range. If you don’t make any claims against the policy, you won’t receive any benefits from this type of insurance during the life of the policy. Other types of insurance are like that, examples include home insurance and auto insurance.

Whole life insurance on the other hand is viewed as a type of investment.  If you were to cancel a whole life insurance policy, the insurance company would return to you the value of the investment that has accrued since you began the policy minus any fees.

How can you tell which type of life insurance is right for you? Term life insurance generally results in lower monthly premiums with higher overall coverage. With the money you save on this type of life insurance versus whole life insurance, most people can still invest in other things like mutual funds, real estate or the stock market and get as good or better rate of return than the investment in a whole life policy. Many people will buy whole life insurance for specific tax or estate planning purposes.

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Know About Health Insurance

Thursday, January 28th, 2010

Health Insurance4

Having reliable health insurance coverage contributes a great deal towards a person’s sense of security. Basically, health insurance coverage is divided into two categories: private and government-sponsored.

1>     Private health insurance

This is a non-government health insurance coverage that is paid for by an individual.

2>      Employment-based plans

This health insurance plan is offered by the company that you work for. You may also take   advantage of being a dependent for a relative’s health insurance coverage that includes one’s immediate family.

3>      Directly-purchased insurance plans

4>      Government-sponsored health insurance packages

These are plans funded by the federal government. There are several levels, ranging from local, state to federal coverage.

This health insurance plan is required by law and has several types:

1. Medicare

This is a health insurance program which is offered on a national level.

2. State Children’s Health Insurance Program

The basic principle, however, is to offer health insurance benefits for the needy.

3. Military and veteran health care

There are several health care benefits and insurance plans which are provided for retired or active members of the military.

Also, the Department of Veteran Affairs offer health insurance coverage to veterans and their dependents.

4. Indian Health Service

Health insurance plans are also offered to eligible American Indians.

If you are self-employed, look for a company that offers extensive health insurance coverage, and at the same time would not make a big dent in your pocket.

Learn everything about the health insurance plan that you have. If you bought it privately, if it is part of your employee benefits or it is a coverage sponsored by the federal or state government, it is better to be aware of your rights to suitable health insurance coverage.

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Choose Term Insurance Instead of Whole Life Insurance

Thursday, January 21st, 2010

choose life insuranceMost people are familiar with “whole” life insurance.  This is the kind of insurance where you will get back a certain amount of money when it “matures” at the end of the insured period.

What you may not know is that there is another form of life insurance called “term” life insurance.

Similar to whole life insurance, when you get a term life policy, you pay a sum of money (the “premium”) to the insurance company, and in exchange the company promises to pay out a certain amount of money should you die during the period for which you are covered under the policy.

In other words, you are buying insurance coverage for a certain period of time.

But unlike whole life insurance, you will not get back any money at the end of the insured period when you buy term insurance.

Well, one advantage of term insurance is that it’s cheap.  In fact, for the same amount of insurance coverage, the premium for a term policy is only a small fraction of the whole life policy’s premium.

And this is why term policies are a great way for you to make sure you are sufficiently covered.  If you’ve never checked out the premiums of a term life insurance, I highly suggest that you go do it soon.  You’ll be surprised at how cheap it is to bump up the insurance coverage for yourself!

This strategy is generally known as “buy term and invest the difference”, and it’s something I recommend that you take into consideration as you do your financial planning.

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Families without Term Life Insurance

Thursday, January 14th, 2010

life insurance 4All we could afford was a rundown council house.  Imagine, just for a moment, your family’s life if the worst was to happen and you didn’t have life insurance?

The purpose of life insurance is to guarantee an income to your spouse and children if you were no longer able to contribute to their welfare like you do now.  Think about it, if something were to happen to you, could your family afford to live in your current home? Would your spouse be able to support your family easily?

Of course, it is this time when funds are often stretched that life insurance is most needed but often that very fact puts families off from the regular commitment of insurance premiums.

But the good news is that it makes you a good candidate for term life insurance because it is the most inexpensive form of life insurance around.  The premiums for term life insurance are worked out based on your age and health and are usually purchased in terms of a specific number of years – 1, 5, 10, 20 or whatever period you would prefer.  The upshot is that term life insurance has the highest coverage for the lowest premiums.

While term insurance is not ideal for older individuals as prices go up substantially with age, it is the great solution for younger couples or families who have high debts including mortgages, life expenses and dependants. The insurance can cover you while your children grow and the mortgage is paid off.

So first up, make sure the primary income earner is covered.  If this income disappeared then you want to make sure the ongoing family needs are covered.   Insurance could cover that additional cost.  So if any secondary income is relied on to cover expenses either through income or an unpaid contribution then that person should also have an insurance policy.

Do you need to get life insurance for your children?  Otherwise, there is no reason for children to be insured as they do not contribute to the family income.

Having life insurance not only gives you peace of mind knowing your family will be taken care of after you or your spouse has gone, it may well be one of the best financial decisions your family could make.

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Level Term Life Insurance

Wednesday, December 30th, 2009

life insurance 3Term life insurance is often called temporary life insurance. Term life insurance is purchased to cover some type of asset over a fixed period of time. Term life has much lower rates than permanent plans because of these shorter time periods. Level term insurance is purchased to cover short intermediate-term obligations. The time periods can be 5, 10, 15, and sometimes 20 years. Short term debt is often covered by a level term policy. Family budgets are full of short term debt obligations.

When you purchase these items you are often approached to buy credit life insurance to cover these obligations. It would be less expensive for a family to purchase a level term policy or rider to cover this kind of short term debt.

Level term policies are better than credit life policies because the insured can choose the beneficiary. Level term policies are better buys to hedge against inflation. The decreasing term policy is a little less expensive but the coverage declines. You may want to compare level term rates and decreasing term rates. The best type of life insurance planning includes a base of permanent insurance for life time needs and additional forms of term insurance for temporary needs. Level term life insurance is an excellent option for short term or intermediate term debt obligation.

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