Most of us are responsible adults and have purchased insurance for our cars, our health, and maybe even our homes. So how is it that we have forgotten about the most important type of insurance we can buy: life insurance?
Many people overlook life insurance because they feel that it is too expensive and too complicated. We’d like to change that.
Cheap Life Insurance is Available
Most people drastically overpay for life insurance simply due to laziness. Life insurance companies are competitive, and the best way to ensure you get the most affordable, low-cost life insurance is to force them to compete for your policy. After using our website to find your potential providers, we recommend you request quotes from all of them.
Life Insurance isn’t Complicated
Okay, that was a lie. Life insurance is a complicated topic. But it’s also incredibly important for you and your family that you invest time into understanding it. Spend a bit of time on this website and you will have a full understanding of the different types of life insurance and exactly what you should do to ensure that you get the absolute best-priced policy. First read what is life insurance and then learn about the various types offered.
How Life Insurance Works
If you’re familiar with auto insurance, you have a basic understanding of life insurance already. Basically, insurance is a contract between the insured and the insurer that guarantees that the insured is paid in the event that something negative happens. In the case of auto insurance, this would be an accident. However, life insurance is slightly different. Life insurance is the only type of insurance that pays its benefits only after the person that purchases the policy passes away. It seems a little bit counterintuitive, but when you think about the reasons for purchasing life insurance, it starts to make more sense.
Why Purchase Life Insurance?
Life insurance is typically purchased because someone wants peace of mind. They want to know that when they pass away, their wife or husband, children, and extended family members will be taken care of. There are a lot of fees and bills associated with death – hospital bills, funeral costs, taxes, estate sales, etc. Many families simply do not have the funds to cover all these expenses, especially because they hit all at once. Life insurance is a great way to alleviate the stress and financial burden of your own passing, as well as provide some financial security for the future years.
Types of Life Insurance
You can get two different types of life insurance, both of which have their own unique benefits.
TERM LIFE INSURANCE
Term life insurance is what is most commonly referred to as life insurance by those who do not know the intricacies of the business. Term life insurance is the simplest type, and operates almost exactly like health or automobile insurance operates. Simply put, it is just the agreement that a cash sum will be paid upon the death of the policyholder. Typically it is purchased at a young age, when premiums are much lower. This is due to the fact that you are much less likely to pass away when you’re younger, so insurance companies can feel comfortable in providing you cheap life insurance. As you age, your premiums will increase because there is a greater chance that you will pass away.
If you feel like keeping it simple, term life insurance is going to be your best option. It typically ends up being more affordable/low cost than the other option, which is permanent life insurance.
For more information on term vs whole life insurance, check out our more in-depth explanation.
PERMANENT LIFE INSURANCE
Permanent life insurance has many different sub-types. The basic distinction between term life insurance and permanent life insurance is the fact that permanent life insurance will accrue a cash value over time.
Permanent life insurance gives you some extra flexibility to utilize your policy while you are still alive. If you find yourself coming up on hard times, you have the ability to withdraw cash from your policy, making it available for use immediately. If you have to take out more than your policy is worth, you’ll be forced to surrender the policy, which in effect cancels all benefits that you would get from the life insurance policy and gives you a cash payout. This is something that would only be used if it was absolutely necessary, but simply the fact that it exists adds extra flexibility to your life insurance plan.
Cheap term life insurance and cheap permanent life are both out there. Affordable term and affordable whole policies can both be found.
It’s up to you which one you decide to go with. If you are younger, term life insurance is typically going to be the cheaper option, especially if you’re on a shoestring budget. If you’re older, term life insurance is going to be very expensive to get into and you may want to go with permanent life insurance which may be more affordable and which will give you the ability to pull that cash out if needed.
Whichever you choose, the biggest factor in whether or not you get the lowest cost life insurance available is whether or not you shop around. Comparing quotes may seem like a boring task, but it can actually be fun if you turn it into a game. Try to find the absolute lowest rate possible for both term and permanent life insurance plans.
The fact is that you’re going to save a lot of money if you take the time to do the comparison shopping. It’s kind of like when you go out and buy a car. You wouldn’t go out and just buy the first car you see, would you? No, you would negotiate with dealers, test drive other cars, and play one dealer off of another to make sure you get the lowest price. The fact of the matter is that insurance companies are businesses, and they’re all competing. Over what? Over you – so don’t make it too easy for them!