The Best Forms of Life Insurance Policy
When looking for life insurance, it’s important to find the best policy for your own unique needs. There are so many web sites offering online discount life insurance, so it’s a common mistake made by many, to end up with a policy that’s not suitable.
There are a variety of life insurance policies available, so it’s important to understand the differences.
Term Life Insurance:
Term life insurance is a bit like leasing a car. You pay cover for a predefined term, and are covered for that term. However, at the end of the term, whether for example its 15 years or 30 years the deal is done and you simply walk away.
This means that term life insurance only offers protection for the duration of the mortgage, and is usually of little value once your mortgage is fully paid off.
Term insurance is generally cheap and is expected to fall over time providing you don’t suffer from a major disease. However, there are a number of different types of term life insurance policy:
* The first is level term insurance, and it is the most popular type of cover. This policy has it’s premium costs locked in for the full term of the policy, so you pay the same amount each month for the entire term of the policy.
* The second type of term life cover is known as escalating term insurance. This type of scheme means that you pay an increasing amount each year, so the payout at death also increases. They are generally low cost policies, and are more suited to first time buyers and the young. However, they can become more expensive as you get older.
* The third type is known as decreasing term insurance. In this case your monthly payments will stay the same, although the amount of cover you receive will reduce each year.
* The forth type of term life policy is known as increasing term insurance. With this type of term life insurance the benefit on death increases. However, in order to make up for this increase you will need to increase your premiums at certain times, for example on the birth of a child, or as your financial circumstances improve.
* The fifth and final type is known as convertible term insurance. It is a type of term life insurance that you can convert at a later stage into an investment vehicle. The value of the investment is normally based on your health when you originally took out the policy.
Whole of Life Insurance Policies:
Whole of life insurance covers you right up until the time of your death, providing that you keep paying your premiums. It can give a considerable lump sum to your family when you die, and it normally accumulates in value over the years.
The amount generally increases in value over the years. Also, the contributions you make to your policy normally earn interest each year. When this happens, your premiums may reduce over time, to the point where you no longer have any more premiums to pay.
However, it’s important to understand that it is possible the cash-in-value of a whole of life policy may actually be less than the amount put into the policy over it’s full term.
Summary:
The decision of whether to buy a term life policy, or whole of life cover comes down to your own unique needs, and circumstances, and what you wish to achieve.
Term life policies are the simplest and cheapest to set up, and cover you only for as long as you need them.
On the other hand, a whole of life policy might suit you better if you need a policy that grows in value over the years.
Both types of policy have advantages and disadvantages, and that’s why it’s always a good idea to get advice from a competent insurance adviser.
Michael Pettigrew writes articles for insurance website Best Insurance Quotes, who provide quality cheap life insurance cover. Visit Best Insurance Quotes for great life insurance cover
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