Life insurance is a great way to make sure your loved ones are cared for after you are gone, but knowing the differences between each type of insurance policy will help you to determine which rate is actually the best for you when you compare life insurance quotes. Here are a few things you need to know about whole life and term life insurance options as you shop for your next policy.
Whole life insurance, which is also known as permanent life insurance, offers benefits to the policy holders while they are still alive, while term life insurance does not. Whole life insurance builds cash value while creating a tax shelter for your money. This money can be removed from the policy when you need it, whether you decide to buy a new house or you have an unexpected emergency crop up. The important thing to remember with whole life is that any money you remove from the policy while you are alive will not be available after your passing unless you have had enough time to rebuild the value of the policy.
Term life offers a temporary solution, which may be attractive to parents of small children who aren't interested in maintaining a policy after the kids have gone to college. The downside to this benefit is that your premiums may increase substantially once the initial term runs out. As you compare rates from different insurance companies, keep an eye out for policies with low rates and short terms. You may want to check with each insurance company, as they may offer term policies that can be converted to whole life policies at some point.
Term life insurance policies tend to be lower priced, as they offer fewer benefits to the policy holder. If you are concerned solely with the immediate cost of insurance, consider comparing just term life policies. On the other hand, if you are also concerned with investments and financial growth, you may want to give whole life a second look. Whole life policies earn dividends, which are what builds the cash value of your policy. If you prefer to keep your insurance costs low, you can use the dividends as a credit of sorts to lower your monthly premiums. When you are ready to begin building the cash in your account, you can simply switch out how you receive the dividends.
As you compare insurance rates, be sure to consider the type of policies you are looking at and their different benefits. Once you know what the policies have to offer, you can truly get a feel for which insurance provider offers the best value for your dollar.
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7 April 2016
You love your family, so why wouldn't you do everything in your power to make sure they are okay after you die? Although it might seem like a morbid thought, the fact of the matter is that life insurance is absolutely crucial. I want you to understand how to shop for life insurance and choose the right terms, which is why you should read this website. Check out these interesting articles about how to plan your estate and protect your investments, so that your family isn't left with financial struggles in addition to the recent loss of a family member.