Monday, January 07, 2008

Build A Barrier Of Life Insurance To Secure Your Life.

By John Dale

Life insurance is one of the most common forms of insurance there is, not least because we all need it at one time or another in our lives. Life insurance is a bet you never want to win but remember, it is a gift from you to your loved ones when you are no longer here to care for them yourself.

The most frequent question asked by the insurance holder is how much he can be insured for. The answer is not as simple as we think of because it depends upon your personal status. There is a formula used extensively by the industry which gives an amount that shows how much your liabilities will be covered such as mortgage, other loans and credit cards and it also give claimer an additional salary of two years.

Life insurance policy is of two types known as whole life affordable insurance and term life insurance. The most important thing is to take correct decision for your loved ones or family about there future finances because once you have taken a decision you can not go back and correct it.

Term life insurance is a straight forward bet between you and the insurance company. You bet them that you are going to die within a set number of years. If you die, you win! The insurer then pays out the value of the insurance policy but if you live one day past the end of the term selected, you get nothing! These policies are cheap and never acquire any investment value with the premiums being used to pay for insurance cover throughout the life of the policy.

Whole life term insurance policy is much more complicated than life term insurance because whole insurance requires high premium from policy holders. They divide the premium into investment fund within the policy. And they periodically keep reviewing the premium each after five or ten years to check whether there premium covers the load claimed by policy holder. If the premium is not enough to cover the claims made by the policy holder, then they use investment fund to fulfill the requirements.

Some people think that whole life insurance policy is better then term insurance policy but what they do not understand is that this type of insurance policy is not ideal for every situation. Let us suppose you have a new family and you have just bought yourself a new home. Now you know that you will be in a tight spot where finances is concerned so paying for the high premium of the whole life insurance might be a bit difficult for you. In such situations it would be much better to get term insurance since it is much cheaper and also provides you protection.

Policy holder finds whole life policy very attractive because it provides the full financial coverage through out the entire life span of holder. The total amount of cash can be withdrawn at any emergency situation against the planning of policy holder. The clients of whole term life insurance policy are those who have to pay taxes upon their death and they don't want to decrease the value of their state as they don't want to pay taxes so they go for whole insurance policy. In this way the beneficiaries won't be affected

When you consider any life insurance the first thing you should do is to clarify your coverage needs before comparing cost and conditions of life term insurance policies. This is to estimate how much you need to insure yourself for and for how long you need insurance coverage. It will help you to acquire exact amount of coverage which you need.

Make your life easier by performing this step before you start through the insurance maze of premiums, terms, exclusions and underwriting.When shopping for life insurance, the price, or the amount of the premium should not be the primary focus. The first step in purchasing life insurance is to accurately define both the needs of the insured party as well as the needs of the beneficiary. Once these factors have been duly considered, finding the right insurance policy will become substantially less difficult.

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