What Defines The Best Life Insurance?

The best life insurance is life insurance that meets the intended goals of the policy holder. Life insurance is purchased by individuals for many different reasons, and those reasons may factor in when making decisions about what type of policy to buy.

Different Types of Policies

Life insurance policies fall into two primary policies – term life and whole life. The choice of which type of policy is the best life insurance policy depends on several factors, including affordability and long term goals of the insurance.

Term Life – Term life insurance is often substantially less expensive than whole life insurance. These policies are valid for a set period of time and if a policy holder dies during the term of the policy, then it pays out at the face value of the insurance policy.

There are two disadvantages to this type of insurance policy. The first is that if the policy holder cancels the policy for any reason, they do not receive any of their premium value back in return. The second disadvantage is that once the term is completed, they may find that they still have need of the insurance, but may be in such poor health that they do not qualify for a new policy.

Whole Life – Whole life is considerably more expensive than term life insurance. In large part, this is because whole life is actually an investment tool. Premiums are applied to an annuity which pays out when a claim on the policy is made.

Very often, payments on claims are not made in one lump sum, but are instead paid in regular monthly payments that provide stable and steady income for the beneficiary. For young families, this is an extremely attractive option, since payment means that a single parent is left to care for young children. This can also be an attractive option for policy holders who want to ensure that their surviving spouse has a stable income and is financially secure after their death.

Whole life can also be borrowed against and if the policy is cancelled for any reason, the premiums that have been invested are returned to the policy holder in payment for their investment.

Choosing a Policy

Before talking to a life insurance agent, take the time to decide for yourself what your goals are in purchasing a life insurance policy. If your goal is to provide extra needed security for your young family and potentially pay for expenses like a college education for your children or make sure that your spouse does not need to work in order to support him or herself in the case of your death, then a whole life policy might be a better choice. However, if you are looking for a relatively inexpensive life insurance policy that will pay a lump sum if it becomes necessary to make a claim, then you may be more interested in a term life policy. Be prepared, however, that an insurance salesperson will make their best attempt to sell you the type of policy for which they will make the best commission, since that is, after all, their business.

Summary

Ultimately, the definition of what is the best life insurance is the type of policy that will best meet your needs and goals in purchasing life insurance. For many individuals, learning about the differences between term life and whole life helps them make the best decision for themselves and their family.

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