Life Insurance

Insurance is not an investment; it is an important part of a sound, savvy personal financial management.Insurance is protection. It protects the entirety of all that you have worked for in time past. It protects your partner in case of premature death. Your kids go to college because it is place. It holds the family together at a time when money should not be a problem.

You have insurance, but shopping for the right coverage to protect your family and your assets is like learning a new language. Term life insurance, universal life, whole life, real value, dividends, loans against the policy - it is quite an array of insurance products out there and finding the right coverage for your needs may take a little research.

Here is a starter course on getting the most in life insurance and still have the protection for yourself and for your family needs.


There are two basic types of life insurance with plenty of variations.

Term life insurance is very simple to understand. It is also a highly economical protection that money can buy.

Term life insurance is paid as at when the insured (you) dies within a time period - the length of time life insurance in effect. Term life is associated with a range of time frames--five, ten, and thirty too. The younger you are, the lesser the amount of the monthly premium - the amount you pay for the protection each and every month. Premiums are calculated based on two factors - your age (and overall health) and the dollar amount of protection you need. It is easy. A $ 50,000 term life insurance policy will be less in cost when compared to a $ 300,000 policy. Why? You are buying less protection. The insurance company will pay X amount of dollars to beneficiaries when the insured person dies, as far as the policy is in place, i.e., death occurs during the term of the policy, hence the name term life insurance. Term life insurance policy does not accumulate value; you cannot borrow against them and, if you have a short-term and your health changes, you would end up paying more for life insurance than you would normally do if you buy a long-term policy; it covers you for the long term. The other categories of insurance are whole life insurance, also called permanent insurance, variable universal insurance, and universal insurance; all come under whole life insurance.

The first difference that readily comes to mind--that's between term and whole life---is that whole life has a coverage that starts from the day you buy the policy until you die. Of course, this assumes that you pay your whole life premium per month. There is no time limit (duration of the coverage is in force) to life. Buy it when you're young, that way, your premiums will be low, and you will begin to build cash value. That is the other major difference between term and whole life insurance coverage. Whole pays certain amount of dividends that can be used to lower monthly premiums or it can be allowed to earn interest over a period. Life insurance sounds complicated, but if you break it down in simple terms, it is something you can do with a trusted advisor to guide on the right path.

Get life insurance. Get term life insurance if you want lower premiums, and make do with whole life insurance as you build your cash value to which you can take loans.