Types of Life Insurance Policies (Part II)

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by O. Ritter

There are Two Basic Kinds of Life Insurance Policies: Permanent and Term Insurance.

Term Life Insurance is basic coverage that lasts for a period of time, usually 10-30 years. The ability to select a term that suits your current financial and medical needs, at a more reasonable rate, gives you a flexibility not available in the other permanent policy types. The drawback is the lack of an investment piece in the policy – when the term is up, the policy ends without any additional benefit (except that you are still alive!). It isn’t just about saving money on premiums, although affordability is a plus; remember that you get a higher death benefit per dollar spent.

For more details on term insurance please visit these useful sites from New York State Department of Financial Services, New York Life, and Prudential:

http://www.dfs.ny.gov/consumer/cli_basic.htm

http://www.newyorklife.com/products/life-insurance-young-single-adult

http://lifeinsurance.prudential.com/view/page/iliconsumer/30454

 

Whole Life Insurance is a form of permanent life insurance that covers you for the rest of your life, as long as you’re breathing that is! Along with the death benefit, whole life insurance also has the benefit of a savings and/or investment account, and the premiums are based on your health or medical history at the time of purchase. Look at it like a two for one investment; start young, pay less, feel a sense of relief because you’re covered, and earn interest as the years pass by. To the young readers out there, stop equating life insurance as just a death benefit and start seeing it as an investment. It’s just that simple folks. For more details on whole life insurance please visit the following websites from Prudential and Money Under 30.

http://lifeinsurance.prudential.com/view/page/iliconsumer/30379

http://www.moneyunder30.com/whole-life-insurance-good-investment

 

Universal Life Insurance is a form of permanent life insurance (like Whole Life), but is also flexible (like Term Life). It offers lower premiums at the time of purchase and offers a savings element, invested to provide cash buildup. Premiums can be modified as a policy holder’s circumstances change. Universal insurance also offers protection for your family with procedures for leaving a legacy to them. This option could also be beneficial to business owners. With so many options, it is important to do your homework! For more details about Universal insurance and what it offers, visit the Prudential and Investopedia websites.

http://lifeinsurance.prudential.com/view/page/iliconsumer/30379,

http://www.investopedia.com/terms/u/universallife.asp

 

One last note…  Different times in your life will require more coverage than others, and several strategies can help you in addressing your evolving needs that fit within your current budget. This is why I did some digging on the many types of insurance policies that may or may not be best for you today, because tomorrow things may change. Now that you have some information of what each type of insurance offers, take time to reflect and make the best decision for you and your family.

Benefits of Buying Life Insurance When Young (Part I)

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by O. Ritter, November 20, 2014

What do you know about Life Insurance? Have you considered taking out a life insurance policy? If the answer is no, let me give you a brief description of the benefits of taking out a policy and doing this while you’re young! Well, let’s just say the younger you are, the lower the price will be to insure you and let me explain why.  When you are younger, you’re typically in better health than when you’re older.  With that being said, getting lower premiums will be a much easier process and you will be able to obtain a fixed rate as long as you’re paying your premiums on time. This is just a portion of the benefits received at the time of purchase so I encourage you to keep reading on.

“The cost of life insurance depends on many factors, including the type of policy, the death benefit amount, age and health at the time someone takes out a policy. By buying life insurance at a young age, it ensures that if something happens to someone’s health in the future, that person’s rates will always be based on his or her health at the time the policy was purchased,” (New York Life Insurance).

How awesome is that? Pretty awesome! For you readers out there, this is important information to know before taking out a policy so make sure you DO YOUR RESEARCH!

Lastly, let me add that my thoughts on life insurance were the same as many other young adults. I thought, “I’m 24 with limited possessions and no kids – what the heck do I need life insurance for?” In doing my research, though, I found the many benefits it offers including building cash value overtime and being able to take out the cash you need in case of emergency – even if you simply need to pay off a loan. Now, if this information about life insurance hasn’t moved you to at least consider purchasing it, then I MUST say you should still think about it or maybe even pass along the information to your family and friends. This is one investment that is worth your while. Next week I will break down the many different types of Insurance options you have to determine the type of insurance that is best for YOU!

References:

Forbes.com

Wall Street Journal Online