A Life Insurance Primer

As people get older, they generally think more about having adequate life insurance coverage that will take care of their family should something ever happen to them. Conversely, younger people tend to rarely consider life insurance seriously. They're often too busy living their carefree lives to think about the possibility that it could all abruptly end. Unfortunately, this can wind up being a costly mistake.

If you're in the market for life insurance but you're not very familiar with the landscape, you may find all the available options to be a bit overwhelming. So, let’s break them down a bit. First of all, keep in mind that when it comes to life insurance, the earlier you purchase it the more affordable it is. This is especially true for those under the age of fifty, which is the 'line' where the price of coverage tends to take a dramatic jump into higher premiums.

Next, you'll have to decide whether you want permanent life insurance (also known as whole life) or temporary insurance (term life). Term life insurance policies have different lengths. This means that policy premiums are likely to change each time a term expires and is renewed. If you're considering a term life policy, be sure to find out your rights and options at renewal time. Is the policy guaranteed renewable, or will you have to submit to a medical examination in order to be renewed or move to another policy? This is important, because while you may be healthy now, a downturn in your physical condition could mean that you're rejected the next time a renewal arrives.

Permanent (or whole) life insurance policies, on the other hand, do not require renewal because they don't expire like term policies, but they are typically a more expensive investment. The reason for this is easily understandable. To make a blunt oversimplification, a term life insurance policy is simply a 'bet' by the insurance company that you will not die during the period of time the policy is in force. This is why they're less expensive. They are only covering you for a specific amount of time; and, of course, if you don't die, you won't get a refund of the premiums you paid in.

With a permanent life insurance policy, once you sign the contract, you need not be concerned with changes or renewals. As long as you continue to pay the necessary premiums, you'll have that coverage for the rest of your life. While this may sound like the logical best choice, because whole life policies often cost more than term insurance, many people avoid them for that reason. They both have their proper uses and advantages, but if you can afford the extra cost, whole life insurance policies offer more financial flexibility.

Finally, when you're ready to start looking for life insurance, shop around thoroughly. Compare companies and plans to get the best rates and coverage available for your particular needs. Remember, the cheapest isn't necessarily always the best, so be smart when making your decision.