Term, Whole, Preferred, Standard…it seems like a lot to manage. Purchasing life insurance appears hard enough, but when you add in all of the various options, it can become daunting. However, before you decide to give up, you should read the following.
Purchasing Life Insurance is one of the most important decisions you can make in your entire life. It will be a tremendous help in protecting your family in the event something happens to you. It may seem confusing, but it is rather straightforward once you begin researching it…and there is plenty of help available online.
Term vs. Whole what’s the difference?
Term life insurance is known as temporary insurance. It covers a person against death for a set period of time, depending on what that person’s needs are. For instance, if you have small children and they will be grown up, independent and out of the house in 20 years, you can purchase a 20-year term life policy to cover the cost of successfully helping them until they can make it on their own. If your kids will be out of the house in 10 years, then you can buy a 10-year term life policy to get them through the time of most need. You can pay for a term life policy upfront or monthly. At the end of the term life policy, the money you spent is gone. However, you get the satisfaction of having protected your loved ones during their time of most need had something happened to you.
Whole life insurance is permanent. Whole life insurance not only provides coverage but it also provides an area for investment. Part of the premium that you pay goes toward your insurance, while the rest of it goes into an investment account. The interest you receive from a whole life policy acts like a savings account and builds up as the years go on. You will soon arrive to the “tipping point” where the interest you receive from your whole life account will pay for your monthly insurance premium, thus rendering your account “profitable” versus a term life account where you lose all the money paid into the account if you live past the term of the policy. Many people choose both term and whole life so they can achieve the total death benefit they desire, and allow the whole life policy to generate enough interest to pay for both. This works great if you want some life insurance forever, but you want extra coverage just long enough to make sure your kids are out of the house and on their own.
Preferred v. Standard
These terms refer to the type of coverage you qualify for depending on your lifestyle. Preferred Best insurance is provided when you have no past history of medical conditions, you are not taking medication, and your family has no history of serious disease or illness. Preferred insurance is similar to Preferred Best but you may be taking some medications, or you may have some history of family illness. Standard is where most people being covered. Standard insurance applies when you do not have the current medical history, or family history to be covered under one of the previous two categories. Your profession, travel and lifestyle can also factor into what category you are covered under. It is important that you talk to a professional in order to get the best policy for you at the best rate.
Life insurance is easier to understand than most people think. A simple consultation with a professional is usually all that is needed to figure out the life insurance questions you may have.
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