Life Insurance Buying Guide

By Frank Topol

Life Insurance is perhaps one of the most important types of coverage available, but it also happens to be one of the most misunderstood. While some programs may be more complex than others, a consumer's selection should be based upon their specific needs and it is important to learn about all of the different options. There are many different purposes for purchasing life insurance, so an individual should consider their reasons before deciding which protection will be the most appropriate.

Term Life Insurance provides the highest level of protection for the amount of premium paid and is normally referred to as temporary coverage. The term is typically a set number of years that a consumer selects when taking out the policy, but there are some other renewal options as well. Renewable term insurance allows a policyholder to automatically extend their coverage without having to go back through any underwriting processes. Some term policies will even allow a consumer to renew their protection every year until a certain point, usually age 65. The other options within term insurance indicate what type of premiums and death benefits included. Level premium term insurance simply means that the cost of the insurance will not rise over time and is guaranteed for a set number of years. Decreasing term insurance offers level premiums, but the death benefits decrease overtime.

Term life policies are often selected by consumers that wish to secure coverage to pay off a certain debt in the event of death. Decreasing term insurance is often used for this purpose because the loan payoff would obviously be less as time passes. Some consumers will purchase a term life policy that will protect their income until the retirement age. Many people automatically select term life insurance, but there are also some circumstances in which another type of program would be better suited.

Whole Life Insurance will provide coverage for the entire life of the policyholder and does not expire like term policies. For individuals seeking long term protection, the premiums will seem to be higher than term at first and lower than term later on in life. One of the major benefits of whole life policies is that they build cash value and can be seen as an investment as well as protection. The cash value can be borrowed against or ultimately surrendered should the need ever arise. A whole life insurance policy may also be called straight life, which simply refers to the fact that it will cover the policyholder until death.

Life insurance is available for a variety of budgets and doesn't have to be expensive. One of the major factors that influence the amount of the premium is the health status of the insured, so it is often possible to lower rates by exercising regularly and by striving to quit smoking. Coverage levels can be decreased too if the consumer needs to stay within a particular price range. The best method to secure the best coverage and save the most amount of money is to shop and compare multiple quotes online, which will allow virtually anyone to obtain their desired life insurance.