Life Insurance:The Basics

Life Insurance:The Basics

This is a guest article by Life Insurance Quotes, UK

Do you feel as though you need a PhD in Economics to understand how to choose the right life insurance for you? Get in line. Life insurance was once an easy purchase to make, and the options you had were very simple and straightforward. Now, there are thousands of different kinds of plans, and the sheer number of options is simply mind boggling. Make sure you understand the basics of life insurance before you select a plan so you don’t find yourself buying blind.

Term vs. Whole Life Insurance

The first step to understanding life insurance involves grasping the difference between term and whole life insurance. Term life insurance is essentially an insurance product that you buy to cover yourself for a limited, defined period. The length of time varies based on your needs and the conditions of the policy. The term you choose could be as little as one year, but most term life policies last somewhere between 10 and 30 years.

 On the other hand, whole life insurance is a life insurance policy that stays active throughout a person’s entire (hence, “whole”) life. In most cases, policyholders must pay their premiums for a whole life plan every year to keep the policy active. When you have a whole life insurance policy, it remains in effect until you reach a very old age if your policy specifies it. If not, the policy stays in effect until you die.

There are many other kinds of life insurance plans available if you are looking for more than just a death benefit. For example, a variable life insurance plan provides a death benefit, but it also offers a fund on the side that operates much like an investment account. There are other varieties of life insurance as well, but for the sake of sticking to the basics, term and whole life are the most important types you should understand.

Analyzing Your Life Insurance Needs

 When you are deciding which life insurance product is right for you, the first step is to analyze your needs. This essentially means figuring out what the economic needs of your dependents will be once you have passed away. You should consider your current financial situation, and use it as a gauge to determine the standard of living you desire for your dependents after you’re gone. In addition, you should factor in any outstanding bills that you would leave behind, as well as any funeral costs your death would incur. When you are figuring up how much life insurance you should buy, imagine the amount your family would need if you died immediately. This is the best way to determine what your current life insurance needs are before you buy.

You should evaluate your life insurance policy periodically as well. Life changes quickly, and life events such as the loss of a job, divorce, the birth of a child, marriage, or even a major purchase such as a new home can all dramatically impact the amount of life insurance coverage you need. Many experts agree that re-evaluating your coverage at least once every five years – or whenever you experience one of these major life events – is the best rule of thumb. As you get older, you need for life insurance should decline significantly due to less people depending on you for financial support.




Insurance: A Guide

"Remember kids, I have life insurance" - Adam Savage

This is a guest article from Tatyana Levin

These days one must be financially savvy. Money is not easy to come by and should be managed carefully. With the availability of tools that make it easy to keep track of current events, the stock market, and even your own money, it would be almost a crime to not utilize these tools to make the best and most informed financial decisions. Unfortunately, the more there is, the more there is to keep track of. This applies both to tracking tools and money (the small curse within the comfort of having money to keep track of).

 The savvier ones of us dabble in investments, and the savviest make their living that way. The key is that they know what to invest in. Not magically, of course; investors do a significant amount of research to learn how to optimize their portfolios, but they have the understanding.

A grossly overlooked investment is insurance. This may be because is not typically referred to as an investment with the exception of whole life insurance that has a specific investment component within it. Webster’s defines the word “invest” as a commitment of money for a return and “insurance” as a guarantee. This makes insurance the safest type of investment, because your returns are guaranteed.  But returns are not always financial in the case of insurance. They can be, if there is an unforeseen accident, but the most certain return is the feeling of security.

Now there are many different types of insurance, and what you need depends on your current situation. Obviously you only need auto insurance, found using auto insurance leads if you have a car, and you only need renter’s insurance if you rent and have possessions that you would need insured. Insurance is for those who have something to lose. With an attachment to something, either emotional of physical (or dependence, not like physically being glued to your car), comes the fear that it will be damaged or ruined in some way. For example, if your house caught on fire, you would be devastated. What would add insult to injury is not having a way to recover from this horrible disaster.

 These types of examples are not unique to this article. That is the way that insurance is sold. As they say that clichés are clichés for a reason, insurance is promoted this way for a reason.  The foundation of the concept of insurance is uncertainty, and it is the same uncertainty that is conjured up when investing.

The main difference between insurance and investment is that not having insurance creates a feeling of uncertainty while investments by nature are uncertain. Therefore, investing in insurance creates security and is the only secure investment that exists (and is legal). Getting insurance should be one of the easier financial tasks if you apply all the resources available with technological advances like smart phones.

About the Author: This article was written by Tatyana Levin, a copywriter for InsuranceFiles.com