Insurance World

We all have family concerns. We’re concerned about finances – paying the bills, paying back loans, and sending our children to college. We’re concerned about the safety of our family members – Junior’s playing football this year, Jane’s asthma is acting up. We’re concerned about affording luxuries – Suzie’s expensive prom dress, this summer’s family vacation. Yes, if you have a family, it’s inevitable you have your fair share of family concerns.

However, as parents, you’re not always going to be around to make sure these family concerns are handled properly. At some point, your children will grow up and form families and family concerns of their own. This is the ideal situation, anyway. There is always the less ideal situation, which is you, your spouse, or both of you suffers a serious accident that either prevents you from working or causes death.

In the event of such a tragedy, it would be nice to have a financial cushion to fall back on, wouldn’t it? This is where a life insurance policy comes into play. If you or your spouse has a life insurance policy, you can cash in on, or borrow from, it to make up for lost wages and help you get by financially. And, if the accident is fatal, the policy will take care of your survivors once you’re gone.

When purchasing a life insurance policy, it’s important to take these situations into consideration. If you find yourself out of work or experiencing financial hardship due to some other situation, how much money will you need to compensate for the lack of income? If you should be involved in a fatal accident, how much money will your family need to cover the costs of living expenses, bills, and education until they can get on their feet again?

Life insurance policies do more than pay for the expenses you leave behind; they give you peace of mind while you’re still around.

To begin with, you need to understand that life insurance falls into two very broad categories: Whole and term. The basic difference between term and whole life insurance is this: A term policy is life coverage only.
In whole life insurance policy, as long as one continues to pay the premiums, the policy does not expire for a lifetime. As the term applies, whole life insurance provides coverage for the whole life or until the person reaches the age of 100. Whole life insurance policies build up a cash value (usually beginning after the first year). With whole life, you pay a fixed premium for life instead of the increasing premiums found on renewable term life insurance policies. In addition, whole life insurance has a cash value feature that is guaranteed. In term and whole-life, the full premium must be paid to keep the insurance.

With level premiums and the accumulation of cash values, whole life insurance is a good choice for long-range goals. Besides permanent lifetime insurance protection, Whole Life Insurance features a savings element that allows you to build cash value on a tax-deferred basis. The policyholder can cancel or surrender the whole life insurance policy at any time and receive the cash value. Some whole life insurance policies may generate cash values greater than the guaranteed amount, depending on interest crediting rates and how the market performs. The cash values of whole life insurance policies may be affected by a life insurance company’s future performance. Unlike whole life insurance policies, which have guaranteed cash values, the cash values of variable life insurance policies are not guaranteed. You have the right to borrow against the cash value of your whole life insurance policy on a loan basis. Supporters of whole life insurance say the cash value of a life insurance policy should compete well with other fixed income investments.

Unlike term life policies, whole life insurance provides a minimum guaranteed benefit at a premium that never changes. One of the most valuable benefits of a participating whole life insurance policy is the opportunity to earn dividends. The insurance company based on the overall return on its investments sets earnings on a whole life policy. In addition, while the interest paid on universal life insurance is often adjusted monthly, interest on a whole life policy is adjusted annually. Like many insurance products, whole life insurance has many policy options.

Make sure you can budget for whole life insurance for the long term and do not buy whole life insurance unless you can afford it. You should buy all the coverage you need now while you are younger, and if you cannot afford whole life insurance, at least get Term. That is why whole life insurance policies have the highest premiums it is insurance for your whole life, no matter when you pass on. The level premium and fixed death benefit make whole life insurance very attractive to some. Unlike some other types of permanent insurance, with whole life insurance, you may not decrease your premium payments.