As Humans, we know one thing is guaranteed, we must pay taxes and we must die! Since, we don’t know when we will die, we need to have life insurance in place so that we don’t leave our families with the burden of wondering about how they will pay for our funerals. It is best to purchase a policy when an individual is younger, even as a child to get the best rate. The cost of life insurance can vary up or down, but is mostly dependent upon the age of the individual, the health of the individual and whether he/she smokes or drinks.
The Different Types of Insurance
The main types of life insurance are Whole Life, Term Life and Universal Life Insurance. The difference between these types of insurance depends upon the quote, how it’s policy pays out and what it covers when the policy holder dies.
Whole Life Insurance
Whole life insurance provides a set amount of coverage for your entire life. As long as you premiums are paid timely and paid in full upon your death, your beneficiary will receive the full benefit amount. These policies also build up cash value; individuals may access that cash value as payments are made and as the funds grow. The average cost of a Whole Life Insurance policy is between $40-$150 per month. Whole Life Insurance usually costs more than Term Life Insurance.
Term Life Insurance
Term life insurance is life insurance that provides coverage for a stated death benefit during a specified term. Once the term expires, the policy holder may renew, convert the policy to permanent coverage, or terminate. A 35 year old non-smoking individual in good health can expect to pay about $24 per month for $500,000 for a 15 year policy. Insurance for children will be considerably cheaper, with rates remaining the same until they reach eighteen years of age.
Universal Life Insurance
Universal life insurance is a type of cash value policy; also known as an investment policy. Under these types of policies, the excess of the premium payment above the cost of insurance is credited to the cash value. This amount is credited each month with interest. Policy holders are able to make withdrawals from their policies. The amount available for withdrawal is the amount of the premiums paid into the policy; these amounts are typically non-taxable. A male aged between 35-45 years old can expect to pay $103-$150 per month. A female the same age will pay $83-$103 per month.
Generally speaking, life insurance, whether it is term, whole or universal is not overly expensive. It just depends on what an individual needs and wants; it also depends on an individual’s budget. When making the decision to purchase an insurance policy, an individual needs to take into consideration what is needed, how much a burial will be and who they’d like to benefit from their policy when they die.
Individuals also need to do their research and know what type of policy they are purchasing. It will be very disappointing for a loved one to die with a term life policy believing that he has a whole life policy and the benefit they thought they’d get will not be paid. Lastly, if an individual has any type of medical condition or commits suicide there may be a denial in payment of premiums.