A solid financial plan includes personal savings, retirement savings, and an appropriate life insurance policy. Many people wait until later in life to purchase policies. This is due to several reasons. Perhaps they did not have enough disposable income early in their careers, or did not value the importance of having life insurance coverage. It is important to keep very good records and provide the online access information as well as original documents either to an estate attorney or the beneficiary of such policies.
Term Life or Whole Life?
This is probably the most frequently asked question when it comes to understanding life insurance. Consumers can be completely overwhelmed when they try to research policy information online. Remember that the insurance industry is very highly regulated and there are three paragraphs of explanation for every sentence of product information.
The basic difference between a term life and a whole life policy is easy to remember. Term life covers only a specific period, or term, such as ten years. Depending on the age of the policyholder at time of purchase, the term could be anywhere between five and fifty years or more. Premium price is determined by the amount of coverage, the length of the term, as well as the age and overall health of the covered party.
Whole life policies will cover the insured for their entire life, as long as premiums are paid and there are no other restrictions outlined in the policy. A whole life policy provides coverage and a payout upon death, but can also be considered an investment vehicle for some policyholders. Certain qualified life insurance policies generate a cash value which can be used as collateral for large purchases, or borrowed against in times of need.
Life Insurance Annuities
An annuity is a type of payment, usually but not always from a retirement account, that occurs on an annual basis. Some life insurance companies have started a trend and introduced a new product for their policyholders. Select life insurance policies may be converted into annuities that provide income for the policyholder in their retirement years. This will offset the face value of the policy, but provides for financial security in retirement. A qualified and experienced insurance agent can assist with these decisions and ensure the buyer is set up with the best policy for their needs.