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Although most people don’t consider it in their younger years, we all eventually get around to realizing that life insurance is a necessity. A life insurance policy is definitely essential for individuals who will leave family behind in the unfortunate event of their death, but even people who have no beneficiaries need these policies to at least cover their funeral costs and final expenses. Unfortunately, many people choose to avoid life insurance because of its perceived complexity, but once a person understands a few basic concepts, it’s relatively easy to wrap one’s mind around it.
Different Types of Life Insurance
The first thing that many people are confused by is the idea of several different types of life insurance plans. Many individuals think that purchasing life insurance would be as simple as getting a policy that will pay off in the unfortunate event of a person’s death. In actuality, there are several types of coverage that all have their own benefits.
Term Life Insurance
Term life insurance provides protection for an individual for a specified period of time. This “term” is often a year in length and requires a person to pay a premium at the beginning of each term. This premium will increase as the person gets older. Term life insurance is about the closest thing a person will ever get to “pure” life insurance.
Term life insurance is considered “pure” because a policyholder pays an amount based on their risk. This amount gets higher as a person gets older simply because the risk of them dying has increased. If a person happens to die during that term, their policy will pay the face amount of their policy. This face amount usually stays the same, and thus, it provides simple protection without the “bells and whistles” of other types of life insurance policies.
Whole Life Insurance
After comparing life insurance rates, many people forego choosing a whole life insurance plan because of its price. It’s important for people to realize, however, that the price difference between term and whole life insurance plans isn’t significantly different over a person’s lifetime. Whole life insurance plans have a set premium, which many younger people find too expensive, that will pay a guaranteed death benefit when a person passes on.
The thing to remember is that even though whole life policies may seem expensive when a person is young, the offered premium will stay the same throughout their life. This means that, unlike term life insurance, their premium doesn’t increase as their risk of dying in old age increases. Mathematically, term and whole life insurance cost about the same over time. An additional benefit of whole life insurance, however, is that a policyholder can actually take out loans from the cash value of their policy.
Accidental Death Insurance
Accidental death insurance is often an appealing option for young people due to several reasons. This type of policy only pays out if a person dies due to an accident. Deaths resulting from suicide or health issues are not covered. This allows insurers to offer these policies at much lower prices than either term or whole life insurance policies.
These policies are also often referred to as accidental death and dismemberment insurance since they often pay off if a person suffers an accident that leads to serious damage to their body (ie. lost limb, blindness). These policies are often not viable for the elderly or those with chronic diseases. People who engage in certain activities like skydiving, flying or mountain climbing may also not be covered.
Finding Low Cost Life Insurance
Once a person realizes that they need life insurance and that there are several options available, it’s time for them to seek out the best price on these policies. Not all policies are created equal, and some that actually offer the exact same benefits could have wildly varying premiums dependent on which insurer is chosen. Luckily, there are a few time tested methods of finding cheap life insurance quotes.
Finding the Best Type of Policy
It is absolutely imperative for a person to find a life insurance policy that fits their specific needs. Some companies will try to “upsell” a customer to certain policies that just aren’t economical or necessary for their basic needs. This makes it pertinent for a person to start out by researching different policies in their area.
The aforementioned policy types (ie. accidental, whole life) all have distinct advantages and disadvantages when it comes to death benefits, premium costs and many other factors. An individual should evaluate their current situation in life and use that knowledge to make a good decision on an insurance policy that best fits their needs. They should then avoid letting themselves be talked into unnecessary additions to a policy.
Comparing Quotes Online
Comparing life insurance quotes online is likely one of the best moves that a person can make. Before the advent of the Internet, it was necessary for a person to contact several insurance companies if they hoped to find the best prices while making real comparisons. Since most companies will not even discuss insurance rates over the phone, the majority of people ended up having to actually visit these companies.
Comparing life insurance quotes online is the quickest way for an individual to perform real comparisons. All information related to a company’s pricing and benefits can be found on the Internet, and this ends up allowing a person to compare multiple companies in a matter of minutes if they know what they’re looking for.
Change to Healthy Habits
Most people believe that their life insurance rate is simply set at whatever price they purchase it at, but this isn’t always the case. Even individuals who already have life insurance can start to save money on their policies. People who engage in certain unhealthy habits (ie. smoking) or have certain health conditions often end up paying more for their policies. If they stop these habits or their health improves, however, they can request a rate review.
Purchasing life insurance is one of the best moves a person can make for themselves and their family. This simple act ensures that a person will leave no final expenses behind that put others at a disadvantage. More importantly, for those who have a family, it ensures that their loved ones will be cared for after their death. Some of the biggest issues that a person will face when searching for a good life insurance policy are understanding different policies and finding the best price, and once these issues are faced, life insurance becomes far less intimidating.