Protection for Every Budget
The thought of our own mortality is most certainly a sobering one, which is perhaps one of the many factors that deter more and more Americans from buying life insurance coverage. In fact, according to the industry-sponsored organization LIMRA, the percentage of American households carrying life insurance is at its lowest in 50 years. In 2000, 90 percent of husband-wife households with children under 18 had life insurance as part of their financial portfolio. By contrast, in 2010, that figure had dropped to only 77 percent. While thinking about the monetary implications of death is unpleasant, it's something that everyone with financial dependents must do. The right coverage will help ensure the economic survival of those you leave behind.
Term or Permanent? Compare the Two Types:
Almost every plan can be broken down into two basic categories: term or permanent. The key difference between the two is the duration of the protection. Term coverage will only pay a death benefit if the policyholder dies within a specified time period, typically ranging from 5-30 years. Permanent, on the other hand, will pay a benefit upon the covered member's death no matter when it occurs. The most common forms of this coverage include whole, universal, and variable. Below, you will find brief descriptions of all the aforementioned products types.
Compare Quotes and Choose the Best Option
If you're ready to begin looking for policies or even if you're not sure what type of plan is best for you, we have a tool that can help. With our electronic comparison tool, you can compare the rates and details of up to five different policies at once. All the quotes we provide are free, and you're under no obligation to buy. With just a little information about you and your coverage needs, we can supply you with affordable quotes from respected carriers instantly.
Designing Your Policy
When you structure your plan, you will have to decide its purpose, death benefit, and term. In deciding your policy's purpose, consider whether you want it to function solely as basic protection in the event of a premature demise or if you'd also like to use it as an investment tool. If you want the investment option, then permanent is the right choice. Next, you will need to decide on a death benefit, or how much your beneficiaries will receive upon your passing. Consider your income, your family's current standard of living, and any major expenses (college tuition, mortgage, etc.) that might be on the horizon in choosing a death benefit. Finally, if you decide to purchase term insurance, you will need to select the policy's duration. In so doing, think about how many years will pass before your children become financially independent and how long it will be before your mortgage is paid off. For instance, someone with one college-age child and no mortgage could choose a much shorter period than someone with two small children and 20 years left on his or her mortgage.
- Term - temporary coverage that will end in predetermined time period, has no cash value, and usually offers the most affordable premiums. Common terms include 10, 20, and 30 years. Premiums can increase as the covered member ages unless the rates are fixed.
- Whole - offers lifetime protection and accrues accessible cash value over time, thus doubling as an investment vehicle. Premiums remain the same for as long as the policyholder lives. He or she may use the cash value of the plan to supplement income.
- Universal - offers a flexible death benefit, flexible premiums, and lifetime protection. Universal policies also build cash value that the policyholder may access. He or she has the option to adjust how large the death benefit and premiums are according to their present needs.
- Variable - a cash-value plan that allows the insured to set aside a portion of his/her premium dollars to an independent investment account comprised of funds and other investment instruments. Variable policies tend to be the most expensive and are considered securities contracts because of the risks of investment.