Choose Wisely: Life Insurance Options
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Choose Wisely: Life Insurance Options

If you are interested in purchasing a life insurance, it is always a good move to educate yourself first about life insurance options before talking to an agent who could mesmerize you with insurance lingo and end up paying too much for an insurance policy that may not satisfy your needs in the long run. The two most common types of insurance are the Term Insurance and the Permanent Insurance.

Term Insurance

This type of insurance has already provided a preset amount of cash if you die while the policy is still active. An example of this would be a five-year $130.000 term policy that pays off if you die within five years. If you live beyond the agreed term, you get nothing. The younger you are the cheaper it is. It is suitable for younger parents who want a substantial coverage at a lower cost. The chances of you dying in your 20s until your 40s are quite low, the cost of term insurance during these years is as reasonable as life insurance gets.

However, the older you get, the more expensive it will be to purchase term insurance. Of course this is understandable because the older you get, the chances of you dying during the policy term is greater. A thing to remember about term insurance is that you can never lock in the right to maintain the policy no matter how old you become. If you want an insurance that will cover you until you die, this type of insurance probably is not for you.

Permanent Insurance

On the word itself, “permanent” life insurance is a type of insurance that can never be canceled as long as you are able to pay the premiums. It is also an investment. It is however much more expensive than term insurance. As I said before, permanent insurance is also considered as an investment. Why? It is a type of insurance that provides guaranteed cash values and benefits in return for fixed premiums. The excess money you will be paying for your premium for the next few years will go into a reserve account, which is invested by the insurance company. These investments yield returns in forms of interests and dividends. A portion of this is then passed along to you.

Word of advice: Although permanent life insurances are a great investment, this should not be your sole purpose. Maximizing your investment return is not the purpose of insurance. If that is what you are looking for, it would be much better if you look into much cheaper term insurances and put the money you save in other tax-deferred investments.

At the end of the day, it will always be your decision to choose what type of life insurance options will better fit your needs, lifestyle, and budget. So whatever you choose, it is always better to know your other options first, educate your self first, and let your life insurance agent find the best policy for you. You worked hard for the money you will be using to pay for your insurance policy, make sure it doesn't go to waste. Be sure to look up on the correct way on how to buy term life insurance online.


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