The concept of life insurance is actually pretty simple so it is important to pay today so that the insurance can protect your children once you are gone. With so many life insurance covers out there, you may not know which one to go for but don’t worry as there is a guide below that will take you through.
Coverage and feature to consider.
- Basic protection.
Need life insurance to just provide financial support to your survivors if you die unexpectedly? Term insurance generally provides coverage for a specific length of time, at a lower cost than other types of insurance.
- Market Participation and cash value.
If you need insurance protection for a long term and want the potential to build cash value and have a little more money to spend, consider permanent life insurance. There are three types of permanent life insurance policies which includes:
- Whole life insurance: Builds value based on set schedule. You will know the exact cash value of your policy at each anniversary; That is to say when you take a loan or withdrawal from your policy, the cash value and death benefit will increase.
- Universal life insurance: This earns a fixed interest rate on the cash value of the policy. While the interest may change over time, it will never dip below a guaranteed minimum rate.
- Variable universal life insurance: It lets you invest your cash value in the stock market, so your policy value goes up or down based on the performance of your investments. The investment subaccount options in VUL policies are not offered for sale to the general public.
- How long should your coverage last?
Are you the kind who is looking for a life insurance coverage just for a specific time frame – like while you are paying off your mortgage? Term life insurance offers protection for a set period. All other types of insurance cover you for life, as long as the premiums are paid.
- Fees and charges.
Before you buy, ask about the fees and charges associated with the life insurance policy, how they are calculated, and what they are for.
- Access to your money.
Will you actually need to take money out of your policy in the future, for instance, to pay college tuition or as a retirement income? Most whole, universal and variable universal products allow you withdraw money from your policy or take loans. But some do restrict you can take money, how much you can take and the interest rate that is for the loans you borrow.
- Flexible payments.
Some universal and variable universal life products allow you make flexible payments once you have paid enough to cover your policy charges.
- Hearsay rule.
Many at times people invest into wrong insurance policies due to the fact that the go by hearsay. It is not necessary that the policy your relative or neighbors or friends have taken will also be appropriate for you. We all differ in terms of requirements and health needs. The ideal way would be to choose your life insurance policy based on your financial and health needs.