| Life Insurance - Which Type of Policy is Right For You? |
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| Written by Stephen Daniels |
| Thursday, 14 January 2010 11:00 |
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Numerous people avoid getting life insurance. The reasons for this avoidance include the belief that it is not needed at this time, fear about not being able to qualify, and the extra expense associated with coverage.
Numerous people avoid getting life insurance. The reasons for this avoidance include the belief that it is not needed at this time, fear about not being able to qualify, and the extra expense associated with coverage. The truth is that there are times in your life when you probably do not need a policy, but these times are few, relative to the times when it is important for the financial health of your loved ones. The many available choices be confusing. Not all choices are easily understandable by the average person. Don't worry: The secrets of life insurance can be unraveled. Your life insurance agency can be a great resource. Following is basic information you need to know: Straight life insurance is also known as whole life or permanent insurance. Your premiums are set for life when you purchase the policy just like the death benefit. In general, the younger and healthier you are when you purchase the policy, the lower your premiums for the rest of your life. As long as you pay the premium, your beneficiary will receive the proceeds when you depart. Straight life policies amass cash values that you can borrow if needed. But this will reduce the amount that will be paid to your heirs, if it is not paid back. Annuities have two benefits: they have a death benefit and can create a stream of income for you while you are still alive. There are several types of annuities, but there are two basic types; fixed and variable. A fixed annuity pays a fixed yield and has pre-determined payout to you while still alive depending on the date that you annuitize the policy and how many years the insurance company estimates you will live to collect those payments. You also can elect to pay a fixed payment monthly in exchange for a fixed monthly benefit for a specified period of time. A variable annuity functions the same way, but can potentially pay much better benefits. Your premiums are invested in the stock market so they have the potential to earn or lose money. Your actual monthly payout, should you decide to annuitize depends on your success with your investments. There are also other options available with annuities, but you should talk with an agent for more details. Discuss with them about whether or not this is a good option for you. Perhaps the most popular is term life which is the easiest to understand and is the most economical. Term life is for a specific term (example 10 years), and will pay to your heirs only if you die during the term of the coverage. Young families can purchase a high amount of coverage relatively inexpensively to ensure that young children will be taken care of in the case of the death of one of the parents. Term life insurance does not build cash value. Burial insurance is self explanatory. It is meant to pay funeral expenses. Mortgage life is like term life but usually more expensive. The purpose is to pay off the mortgage in case of the death of one of the borrowers on the mortgage. The value declines at about the same rate as the mortgage balance declines. Inexpensive term coverage, which retains a consistent life amount through the term of the policy, is a better value. For more specific information about what type of protection would be best for your situation, it is always recommended that you do your own research, and of course, check with an agent who can answer your questions. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. In the San Francisco Bay area, call on Stoneridge Financial for advice and assistance with life insurance and other insurance related investment products. Powered by SEO 2.0 Services |