Life insurance is (or should be) an important part of nearly every household's financial plan. If it's not part of your family's financial base, it may be that you find life insurance too confusing or complex or maybe you're just adverse to the idea of considering the topic of your own or your spouse's demise. These are not uncommon reasons for avoiding the subject of life insurance.
Who Needs Life Insurance?
Simply stated, life insurance is an obligation for anyone on whom someone else is dependent for financial support. Whether this dependent is a spouse, a child, a parent, a sibling or a partner, if your death would mean a significant financial loss for another person, you need to have life insurance. If you're retired with a secure income or independent financially and no one would suffer financially at your sudden death, then you probably don't really need life insurance.
Two Types From Which To Choose
Life insurance is divided into two types – whole-life (permanent) and term-life. Term life is the least expensive and simplest form. With term life, the insurer sets the cost of the policy according their perceived risk of your dying within the term, which is typically 10, 20 or 30 years. If you die within the term of the policy the stated death benefit is paid to your named beneficiary.
Permanent insurance uses the same “risk of death” assessment for helping determine premium cost but also features a savings component, referred to as the cash value. You'll find three types of permanent life insurance – whole life, universal life and variable life. What differentiates these from one another is the way the cash value funds are handled.
Decoding Life Insurance Quotes
Here are four tips for decoding life insurance quotes:
1. Use an independent broker with access to multiple life insurance companies to get multiple quotes side-by-side.
2. Life insurance costs are determined by your age and health. This is a competitive business and most life insurance companies offer about the same policy costs.
3. Insurance costs are the same whether you buy online, from an independent agent or straight from an insurer. There may be differences, however, in service quality. An independent broker can help you find the best companies.
4. If you have a particular health issue, your broker can steer you toward an insurer that may be more lenient to individuals with your condition.
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