Life Insurance Information

Before you shop for life insurance you need the right information to make an informed decision. The industry suffers from a wealth of misinformation unfortunately as both companies and their agents seek to improve their profit structure by selling products that are attractive on the face but actually inefficient and costly.

Let's begin with the basics of what life insurance is and what it is not. Term insurance is just that - straight insurance coverage. When you buy term you are buying protection. Protection from your premature death. Assuming the premiums are paid, the insurer will pay the face value of the policy to the beneficiary you have named. Terms vary but you can buy it on a fixed yearly premium basis that increases as you age, or on a guaranteed level premium basis for varying terms from 5 to 20 years. The term policy is simple and easy to understand and while the premiums increase each time the policy is renewed as the life of the insured gets longer, this form of life insurance is the most inexpensive.

Whole life, endowment, straight life, permanent life, universal policies are all forms of the same vehicle which is cash value life insurance. This form is very different from term in that the premium contains an element of "saving" or "investment". In most cases the premiums are level for the life of the policy. A large proportion of the premium provides the savings or cash value features.

From a purely economic point of view, whole life and other cash value products do not rank well on either their value as investment vehicles or on their ability to protect. The most important single reason for avoiding whole life is that it is much more expensive than term. This fact is avoided by agents who confuse the buying public with large amounts of irrelevant statistics and data that deflect the potential buyer from the truth.

The key for buyers is to focus on the protection aspect of policies and the comparative cots of providing it. A basic rule for young married couples with children to seek is to provide protection worth 8-10 times their annual combined gross incomes.

Looking at the investment or "savings" portion of whole life policies, the fact is that over time they make almost no sense. The amount you would spend on the premium allocated to the investment feature of the policy is uneconomic when compared with other conservative vehicles available and remember that in the event of death the "savings" disappear with the life that is assured.

The only thing that can be said for whole life is that a whole life policy does provide you with a contractual commitment to saving. I will not attempt to minimize that since if you buy term and fail to accompany that with a wise investment plan for your family that sets money aside for investment on a committed basis, then you are walking towards massive problems later in life.

Be aware that term insurance, while affording the best protection to you and your family, varies widely as to cost. The need to exercise due diligence in doing the research of rates and insurance companies reputations to be certain that you have the best deal is paramount.  Go to this site and compare rates on Term for free https://www.efinancial.com