Happy family with life insurance

To get FREE comparison quotes from different life insurance companies, start with the Insureme Quote Box above, or click here.

 

 

 

Compare term life insurance and whole life insurance to help you decide which is best for you and your family.

If you are going to get life insurance, keep in mind that it comes in two basic types: Term and whole (sometimes called "permanent").

Term life insurance — Term is the basic, simple form of life insurance. It provides a specific amount of coverage for a set amount of time (the "term"). Common terms are for 5,10, 15, 20 and 30 years. There are also 1-year or annual term policies, but most people purchase longer terms. 

So, for example, you could take out a 10-year term life insurance policy for $500,000. If you pass away during the term, your beneficiaries will receive the $500,000 benefit as cash. For this protection, you pay an annual premium. 

There are two basic types of term: decreasing and level term life insurance. The benefit amount for decreasing term policies drops, usually yearly, until the end of the term. This is typically used for a specific financial obligation such as a mortgage. 

Level term life insurance benefits stay the same throughout the term. This is by far the most commonly purchased term insurance. If you need coverage after the term expires, you will pay a premium based on your age and health at the time of expiration. You can get a guaranteed renewable policy which means that you can renew the policy at the end of the term with a premium based on your age at expiration. 

Term is a more affordable life insurance option. Many families choose this because it can fit their budget, and provides financial protection while many life events are happening such as paying off the mortgage and putting kids through college. 

When shopping for term life insurance quotes, keep in mind that there are also additional provisions you can get with some policies, such as accidental death, return of premium life insurance and convertibility. These may increase your premium, but you should ask about your options.

Whole life insurance — Whole life is also known as permanent life insurance because it provides lifelong protection as long as you continue to pay the premiums. 

People choose permanent life insurance if they have the need for protection throughout life. For example, term can cover a family while they are building assets, paying off debts and getting their children independent. Once this is accomplished, they may no longer need life insurance protection. However, some couples may still want to continue the protection into retirement so if one spouse dies, the other is still taken care of. 

Another reason people choose permanent life is because the policies can also build cash value, making them an additional vehicle for retirement savings or other needs. As you pay your premiums, cash values accumulate tax-deferred and you can eventually borrow against them for any purpose. The collateral is the policy value, and if the loan is not repaid at time of death it can decrease the benefit paid to your beneficiaries.

There are a variety of permanent life insurance products with different cash-value features. For example there's variable life insurance that provides death benefits and cash values that vary based on the performance of investments. 

Universal life insurance gives you the option to pay different premium amounts: higher when you can afford them, and lower when you can't. Premiums for variable and whole life stay the same. 

Whichever type you choose, you'll want to figure out how much coverage you need when buying life insurance.

©2006 - 2010 LowerYourInsurance.com • HomeAbout UsPrivacy NoticeImportant DisclaimerSite Map
Content on LowerYourInsurance.com is presented for informational purposes only
and is not intended as a substitute for professional or legal advice.
Please consult with a licensed insurance professional for your particular situation. See our important disclaimer.