How To Buy Life Insurance

Do You Really Need a Life Insurance?

People say that insurance is always sold, nobody likes to buy it. Because, some of us hesitate to even discuss it. May be due to fear of death, we do not want to accept the greatest fact of life. If you have some dependents or someone relies on your income, you definitely need a life insurance cover. One of the most important benefits of life insurance is that in case of your death, you are able to protect your loved ones against financial consequences.

On the other hand if you spend your time at home and extending services like cooking, child care etc to your family, you also need a life insurance. If you are old you need life insurance to face the unexpected medical or other type unforeseen expenses.

In case of an early death of spouse kids in particular suffers a lot. Funds are always required during a period when it is hard for the surviving spouse to go out for regular job due to small kids. Funds are also required for early grooming, education and other necessities of kids.

If one can afford life insurance, it is beneficial even for minors. It can protect their future in case one of the parents expires or face disability.

What Type of Insurance?

Term Insurance:
If you are under 50 and earn an average income, Term Insurance may suit you being less expensive form of life insurance. It is written for a specific time period, mostly 1 to 10 years. It is always renewable at the end of each term with some increase in the premium amount. This policy has no cash value, it benefits only if you die during the term.

Declining Balance Term Insurance:
It is mostly used as mortgage insurance where premium amount remains unchanged over the term but face value declines steadily. Policy gets expired automatically when mortgage is paid off. It is a pure insurance without any investment. Whenever you decide to buy a term insurance, always go for a policy that is renewable up to the age of 70. It should also be convertible to a permanent insurance without a medical examination.

Whole life Insurance
It gives you a permanent protection with good savings. It goes on and on as long as you are paying premiums. With the passage of time you can also borrow up to 90% amount of your policy’s cash value without paying any tax.

Savings Aspect:
These days’ policies are so flexible in terms of premiums and face value that one can easily increase, decrease or deferred the premiums and can withdraw or change the cash value as well. Companies also offer a confirm return on cash value, minimum 4%. They also send you an annual statement showing all the details.
On the other hand such type of insurance is very expensive in terms of administrative fees and interest rates.

Variable Life
It offers a fixed amount of premium and a control on cash value. Apart from death benefits ,you can invest cash value in stocks, money market or bonds as per your own choice. Ultimate benefit will be based on the performance of investments. Fee of these policies will also be on higher side but one can save some taxes.

Universal Variable Life
Take more risk get more benefit. It is for those who can afford a risk as there is no guarantee. Yes, you can always have a control over your investments in mutual funds.

Survivorship Life Insurance
It is a very unique type as it insures the lives of two. Upon the death of a person it provides benefit to the other. Naturally it is less expensive because it covers two instead of one.

First to Die Life Insurance
This policy insures the life of minimum two persons and benefit is to be paid upon the death of first person. It is also very useful to cover a debt obligation or a mortgage. One can also fund in a buy-sell agreement.

Group Life Insurance
This is an insurance cover which most of the companies offer to their employees as part of their payment package. It is a very good policy for below average class in particular. In the event of death of an employee, his family gets a reasonable support in addition to other benefits.

How Much Insurance Do You Need?

It always depends on your own approach. How you take the things in your life. What is your life style and what is the importance of your dependents for you. And most importantly, how much premium amount you can afford after paying taxes and daily life expenses. You need to determine your net earnings either at year end or on a month to month basis.

Keeping in mind return on investment, you also need to determine your expenses in the older age that include uninsured medical costs, housekeeping, taxes and even funeral costs. One must plan his / her future, not only their dreams but unforeseen as well. The way life is going on these days one can always meet an accident and face disability if not the death.

Final Words

If you want to make a good financial plan for yourself and your family, life insurance cover shall remain an undisputed part of it. You should consult a financial advisor who can workout every thing in a professional manner for you. You need to pick either a term life insurance or a policy with some saving features. An insurance policy with some cash value will be more beneficial instead of a term policy which can benefit in the event of death only.

You must select an insurance company with good repute and financial back ground, read all contents of policy before your final signature. Make sure that all the terms and conditions are clearly mentioned in it.

source: http://www.digimok.com/how-buy-life-insurance