Should You Take Universal Or Term Life Insurance?
Usually when you are deciding on what type of life insurance you should get for yourself without the help of a financial advisor or insurance expert it's easy to get confused. It would help you a great deal to get as much info about the differences in universal coverage and term coverage to make the right decision in choosing the cover for you. On one side you wouldn't want to get yourself the wrong life insurance cover and have your family struggling financially after you are gone and on the other side you don't want major part of your income to be invested in your life insurance premiums. The knowledge of the differences between various types of coverage and the costs involved in each will help you make a right decision that would help your family after you and also be affordable to you now.
The thought process of some people are in the direction that they do not require to cover their life or that it should only be done when they get older and its not reasonable to spend a lot on insurance premiums at a younger age. But the fact is that no one knows how long we are going to live. This makes it very important to have your life covered. And even better to have your life covered as early as possible once you reach adulthood. Even if you are not married and do not have any children there still would be expenses towards your funeral that would need to be addressed after your death, so, insurance is necessary even for the single individuals.
If you are looking towards the expenses in the future and not concerned about the present expenses then universal coverage plans are right for you. The premiums towards these being tax deferred and the policy building cash value many consider these policies as savings account and borrow against it as and when needed as long as they are punctual with their premium payment. It should be considered more as an investment than a necessity. Though the premiums are higher for these they remain the same throughout the life of the policy holder. In some plans the premium may seem to be very high when you are young but as you age the premium cost drops a great deal. This means you can carry on the coverage when you grow old and are on a fixed income like most retirees.
The coverage that is more popular among the young families that start out with mortgages and children is the term coverage, the reason being its low premium cost. This kind of policy is only for certain time period and doesn't have a cash value so a borrowing against it is not possible. The term may be anywhere between one year to twenty years. This is not the right choice for those who are looking to get some return on their premium payment. The biggest drawback with these coverage is that the premium costs rise significantly as your age increases and when the term of your policy ends you may have to pay significantly higher premium for the same cover when you renew the policy. This is more drastic in case you develop some health conditions.
Ultimately the decision lies with you. You are the person who knows best what your requirements in terms of life insurance coverage is and how much you can afford to contribute towards your insurance premium from your income. Before you make a final decision its rational to familiarize with various coverage types available.
