Juanita Martinez

Get the worthy value of your life – Choose the best life insurance

 Life insurance is a financial protection for your family in case of your death. In this article you come to know about which life insurance policy to buy and how to reduce its cost.

Deciding what is the best life insurance for yourself can be a cumbersome job. The types and subtypes of life insurance are quite varied hence you might feel quite bewildered when it comes to choosing best life insurance. The first question you need to decide upon is whether or not you need a life insurance at all. You might not need a life insurance if you don’t have any dependent or you don’t contribute a significant percentage of your family’s income. However, if your family is majorly dependent on you for their everyday expenses, paying of mortgage and other secured loans, education of your children and so on, then life insurance is vital to protect them financially in case of your death.

What are the types of policies?

The three major types of life insurance policies are as given.

• Whole life insurance – This is the traditional life insurance policy in which the premium that you pay remains constant over the entire span of the policy. This stays in effect till your death even after you have paid the entire amount of premium. In a whole life insurance you can build up a cash reserve but you have no control over the way it will be invested.
• Universal life insurance – In a universal life insurance policy, you can vary the amount of premium you are paying. This can be done by using your accumulated earnings in order to cover a portion of the cost of premium. The amount of death benefit can also be adjusted in this policy. However, this flexibility requires you to pay higher administrative fees.
• Variable life insurance – In a variable policy, you can build up cash reserve which you can invest on any of the choices that is offered by the insurance company. The value that your cash reserve will have will depend upon the returns of those investments.

Whether to buy a whole life insurance policy or a term life insurance policy is a long going debate. Actually it depends on the need of an individual. It is advised by some experts that if you are under the age of 40, and you don’t have any family history of a life threatening illness you should go for term life insurance. This kind of policy will offer you death benefits but not cash value. If you buy a whole life insurance policy then you can get both death benefits and cash value. However this is way more expensive than term life insurance. You would need to give half of all the cash value policies within the first seven years which makes the coverage quite expensive due to huge commissions and fees limit. The down point about a whole life insurance policy is that since most of the fees are built in a complex investment formula, you don’t realize how much of your money is going into the pockets of the insurance agents.

How can you reduce the cost on your life insurance policy?

There are a number of ways in which you can reduce the cost of your life insurance policy. These are given below.

• Be healthy – You can reduce the cost of your life insurance policy by a great extent if you maintain a properly and healthy lifestyle. Quitting smoking should be on the top of your priority list. You should also take care not to be obese or even overweight.
• Don’t buy extra – It is good to have precaution but don’t overdo it. You don’t need to buy too much life insurance if you don’t need it. You should make a rough calculation of how much money would your family need to maintain their lifestyle and how soon your children will start earning to maintain that lifestyle.

Thus you can now decide which life insurance to buy and how to reduce the cost.

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