Life insurance is the promise that a life insurance provider makes to pay a benefit to those mentioned in their policies in the event of your death. It offers a luxurious peace of mind for you and your family, who don’t need the unnecessary stress of financial hardship in the disastrous event of something happening to you. This luxury is typically associated with a price, however, and many people feel that they can’t afford it. This article will examine if that really is the case, and if you have to be as wary as you might be.
Types of Life Insurance
Life insurance is split into two categories: term insurance and permanent coverage.
Term insurance is straightforward – the policy provides coverage during a specific number of years. These don’t build up cash value once your term is up – meaning you could be left with coverage you can’t afford should you choose to purchase another plan.
Permanent coverage is insurance that, simply put, lasts for your whole life. You could be an 80-year-old and still pay the same premium you’d pay for a 20-year-old permanent coverage deal (if you were a miraculously mature 20-year-old). Permanent insurance builds the cash value that you wouldn’t get if you had term insurance.
The trade-off is in that cash value benefit. But what does that mean, and how can that affect which life insurance you should choose?
Cash Value
Cash value can make the more expensive permanent coverage cheaper in the long run, as your premiums remain level. It’s easiest to think of like an investment. Before you choose between the two, you should understand why you need life insurance – if you’re concerned about a specific stage of your life, term insurance might be more suitable. If it’s general coverage and money is less of an issue then obviously permanent would be better. You should look through a list of the best insurance companies on a comparison site and see how playing with the different types changes your price.
How you can lower your rate immediately
There are ways for you to lower your life insurance rate immediately. You can lower the term of the policy, which might be the first thing you should consider, depending on your needs. You can also lower the coverage amount, but this can impact the benefits that you will get from your insurance. You could ladder your coverage as well, which is when you work out your needs and buy several different policies (each with slightly different terms), instead of a single more comprehensive policy with a higher coverage amount.
When most people fill out a couple forms for a couple quotations, they are often put off life insurance in general due to the high prices they’d get. It’s no wonder that’s the case if they don’t check comparison sites or have chosen a package that is not suitable for them. That might be why 83% of consumers don’t purchase the life insurance they need because of cost worries, but overestimate the cost of what they should be getting by 300%.
