Life Insurance, To Buy or Not To Buy - That is the Question
Life insurance. Or should it be called death insurance? Either way, getting a life insurance quote is not something most people like to think about.
Life insurance is one of the few things that a person goes out of their way to pay for month after month, year after year, with no hope of ever directly realizing any benefit from it themselves. Life insurance is something that a responsible adult buys not for themselves, but for others.
Let’s say you’ve made the decision to get a few life insurance quotes. You want to be a responsible adult. You’re ready to make the long-term commitment to buying life insurance.
Now comes the fun part. Now you must decide not only how much life insurance to buy – you need to choose what kind of life insurance to buy.
There are two basic categories of life insurance. And while both of them provide your loved ones with the financial benefits you decide on, there are some important and very fundamental differences that could make a big difference to you ten or twenty years from now.
When getting life insurance quotes you’ll be asked to make a choice between term coverage and whole life coverage. If you’ve never looked into life insurance before the differences can be confusing at first – and what’s right for one person may not be right for another.
One of the things that make the choice between a term policy and a whole life policy difficult is that the monthly premium on a whole life policy will be more than the monthly premium on a term policy of the same size.
So why would anyone even consider a whole life policy if the whole life insurance quote is more for the same size policy?
When you buy whole life insurance you are making a flat-out commitment that lasts for the rest of your life. You are agreeing to pay a set amount of money – the premium – each and every month for the rest of your life, regardless of how long you live. The premium you agree to today is the same premium you’ll still be paying on the day you die.
Term life is very different. When you get a term life insurance quote you’re only agreeing to pay the agreed-on premium for a certain number of years. The number of years you choose is known as the term of the policy – hence the name, term life insurance.
When the term runs out, so does your life insurance. And if you want to buy another policy at that time you can – but at a much higher monthly premium. The increase in the size of your monthly premium could come right at the time you’re retiring and your income is dropping You have to ask yourself, if that were to happen, could you continue making your new, higher monthly premium payments?
Typically term life insurance quotes are for 10 years or 20 years or sometimes 30 years.
The amount you pay every month is determined by the size of the policy, your age at the time you take out your policy, and the term of the policy.
Obviously the larger the policy the more you’re going to pay for it. It should come as no surprise that you’ll pay more for a $1,000,000 policy than you would for a $10,000 policy. Most insurance companies allow you to choose from a wide range of policy sizes, from $5,000 to $5,000,000 or even larger. The size of the policy you choose will depend on your (or your heirs) particular needs in order to maintain a lifestyle, and on your ability to pay the required monthly premium.
The older you are on the date you start your policy the more you can expect to pay – again, that should come as no surprise. Older people typically have fewer years left in which to make payments, so their payments must be larger to make up the difference.
And the longer the term you choose – say 20 years as opposed to 10 years – the larger your monthly premium is going to be to cover the additional risk that you will die during the term of the policy. Again, this should come as no great surprise.
Who should buy a term policy? That’s not an easy question to answer. If you’re young and in very good health, your chances of living to 70 or 80 or even 90 years may be pretty good. In this case you may be better off buying a whole life policy, with a premium that remains constant for your entire life.
But what if you’re older when you decide to take out life insurance? Or what if you’re not in the best of health? If you have reason to believe that you probably won’t outlive the term of your term insurance policy, then it may be better for you to purchase term insurance. You’ll pay less each month and the pay-out for your heirs will be exactly the same.
Two final points to keep in mind when you’re shopping for life insurance. It doesn’t matter if you choose term insurance or whole life, the payout made to your heirs after you die is tax free. That’s good to know.
The other thing to remember is that you can almost always save a bundle on your premium each and every month if you simply buy your policy online. Online life insurance is always cheaper because online life insurance agents don’t have the same high overhead to pay for that their brick and mortar counterparts do.
So decide what kind of life insurance quote you’re looking for, get it today, before you get any older, and get your life insurance quotes online to save even more.