It can be a bit of a minefield deciding which life insurance policy to go for. There will be factors that put up its cost, such as age, occupation, and health conditions, as well as considerations to do with the type or level of cover.
Invest in cash value life insurance and you can have a different kind of life insurance. We shall explore the different types available for you to consider.
Cash Value Life Insurance
Cash value means that there is a cash surrender value to a policy. This is the amount that will be offered to a policyholder, should they cancel a policy. This acts as further protection because it means that there is value in the policy, as well as upon death.
With regards to the cost of having life insurance, term insurance will be cheaper than cash value life insurance, if you are younger. However, because a term policy’s costs will eventually exceed its cash value, if you continue to renew, it can work out the opposite. This is something to weigh up with your life insurance adviser.
Term Insurance V Whole Life Insurance
The advantage of term insurance is that it can be taken out for a fixed period and does not have to be a commitment forever, in terms of its premiums paid.
The benefits of a whole life policy, compared to a term one, are that it is permanent, has a cash value in terms of an investment component, and will provide more ways that a family’s finances can be protected in the long term.
The majority of whole life insurances will enow at age 100. Should a policyholder outlive their policy, then the insurance company will pay its policyholder the full cash value.
Permanent life insurance is the policy type that will never expire. This is the case if premium payments are maintained.
$100, 000 Life Insurance
A $100, 000 life insurance policy relates to how much will be received by the nominated relation, in the event of a policyholder’s death. You can choose almost anyone to be the beneficiary of life insurance. This is whether it be the spouse, a civil partner, child, best friend, or a charity.
This type of policy is considered enough cover for most people, in terms of helping their family financially after the death of an income earner.
Life insurance is for those with a family relying on an income. A single person can still have small life insurance to cover their death benefits or funeral costs, however. It would just not need to allow for as much as a $100,000 life insurance policy does.
Know About What is Permanent Life Insurance?
Those who are not employed or have no income will not always qualify for a $100,000 life insurance policy. In cases of stay-at-home parents, a policy can still be taken out as long as the working parent has at least $100,000 of life insurance.
There are restrictions on life insurance policies when an insurer is required to pay out a claim. Payment will not be made, for instance, when a policy term has expired, premium payments have lapsed, or if there is any kind of dishonesty or fraud identified. There will be no payment for death in the event of acts of war, suicide, or where there has been a high-risk activity responsible for a death.
Life Insurance Summed Up
Ultimately, no one likes to think too much about no longer being around, but life insurance can offer reassurance and comfort to both you and your loved ones that your finances are in order.
It is incredibly important to spend time thinking about the future and what could happen to the people we leave behind.
There is a very high chance that your dependents or next of kin will become financially responsible for any of your outstanding debts or expenses like childcare costs, a mortgage or even funeral, medical or care costs and therefore it is vital that you have plans in place to cover these outgoings.
Even if you have been extremely careful with your money and have no current or outstanding debts, leaving a legacy to your loved ones can make things a little easier.
So, which life insurance policy is right for you?
The types of life insurance policies that can be purchased, or invested in, will help families out where the unthinkable happens and the policyholder dies. Generally, they will pay out a lump sum where the policyholder passes away during the term of the policy.
Also, many will pay in cases where a person is diagnosed with a terminal illness and is not expected by doctors to live for more than 12 months. The policy will end once the settlement has been made.
The latter scenario means that someone can enjoy their last days, weeks, or months in comfort, and spend the money on something they can enjoy doing for as long as possible.
Alternatively, the money paid out by life insurers can cover expenses such as medical bills, carer costs, and funeral costs.
