When purchasing life insurance, it’s important to know what type of coverage is right for you, and how much you need. Before you buy insurance, decide the financial amount your family will require, and the length of time you will want to provide for them, in the event of your death. Most people want their beneficiaries covered for at least 2 years, while others seek to supply their dependents with income for life.
With Term Life Insurance, you pay a premium for a determined amount of time, during which you desire coverage. As you age, the rates of Term Life usually increase. You will receive a death benefit for the specified time period, and after that time has passed the policy lapses. You may then wish to renew the policy (at a higher rate) or buy insurance coverage of a different type. Term life is good for those who are single, and need provision for their funeral and burial. It is also appropriate for a family with young children.
If you are interested in purchasing a Term Life policy, you will want to know that it is renewable, without a medical exam, and in spite of your current health status. Be prepared to pay a higher rate each time you renew. Also, find out if the policy can be converted to a Whole Life Policy (of equal value) without having to go through the underwriting process, or a medical exam, in order to qualify.
Whole Life Insurance is another type of coverage, and it is quite expensive. One of the advantages is that you get a death benefit and a cash value. During the early years of a Whole Life policy, the insurance company will take in much more than they pay out. This becomes what is known as a cash reserve for the insured, and a portion of this money is put into fixed income investments. In addition to being able to cash out the policy, you may also borrow against the cash reserve.
There is also a policy called Universal Life Insurance that combines some of the benefits of Term and Whole Life policies.
Always research the financial integrity of any company, before deciding to buy insurance. Confirm that the company and your insurance agent are licensed. The Internet can provide you with a wealth of information about what to consider when purchasing life insurance.