Archive for March, 2011

Ensuring Your Family’s Security: Whole Life Vs. Term Based Policies

March 21st, 2011

For many people, family is the most important priority in their life, and it eventually they will have to make a plan in case of death or illness. With rising costs of living, mortgages, and so many are living on fixed budgets, it’s natural to try and take some of the guessing out of life. You can plan ahead, and minimize the risk to financial security by purchasing life insurance to compensate for unforeseen bills and other financial challenges, which may cause additional stress in a painful time.

There are many different types of policies that are designed to fit a wide range of needs and financial situations. When purchasing life insurance, it’s a good choice to understand most of the decision process is based on factors of need and income. There are traditionally two types of insurance: whole life and term based policies. It’s important to know the difference between the two, so you can pick the policy that best fits your needs. A whole life policy covers the holder and their beneficiaries over the entire life of the policy. Traditionally, whole life insurance is expensive, and the return is usually less than the investment. These estimates are produced by insurance companies and sometimes offer inflated rates due to industry assumptions. This doesn’t mean that whole life policies are a bad idea. They can be incredibly beneficial when individuals find themselves unprepared and underinsured.

For those planning ahead, Term Life Insurance policies offer holders more impact for a lower amount of money, which is the biggest difference between the two different types of policies. Term life policies provide coverage at a fixed rate of payment over a period of time, and in the event of a death, dependants and beneficiaries would receive payments from the insurance company. The amount paid and for how long is determinate on which policy you choose. This policy is the most popular form of life insurance, and the least costly way to provide substantial benefits in the event of death.

It’s important to consider your options before the insurance is necessary. You don’t want to put off making this choice, which may leave your family unprepared. It’s also important to realize that if you wait until there is an illness to buy insurance, the premiums are higher. This is a tough decision, but one should consider all these variables before making such a long-term investment.

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