• Best Type Life Insurance
• Reasons For Individual Health Insurance

Just about everyone has heard of life insurance but not nearly as many people really understand the different types of insurance that are available today. In addition, most people have questions regarding just how much is enough to buy, and when is it a good time to purchase this important coverage. Answering a few questions yourself can be the first step towards answering the questions “What is the best type life insurance”, “How Much?” and “When to Buy?”

Broadly speaking, there are two basic types of life insurance: term insurance, which is a set amount of insurance held for a particular period of time (the “term”), and whole life insurance, which is also for a set term but is designed to also act as an investment vehicle. There are some additional variations on both of those themes but I won’t go into detail here because it can get quite complicated. Generally speaking, the premiums for a term insurance policy will be much lower than those for a whole life policy. Individuals who purchase whole life are looking for the security of the death benefit (the amount paid out upon your demise) as well as the enforced “savings” as a result of the higher premium.

The type of insurance policy you ultimately purchase will depend on a few factors, including your age, your stage of life, and what purpose you want that death benefit to serve. Of course no one likes to think about the end of life but it is a fact that the end does arrive sooner or later, so it is best to be prepared. If you are young, unmarried, and in good health you may want to purchase a minimum term life policy to cover costs that will be associated with your memorial service. On the other hand, if you have problems putting aside money for your future, and you have a decent income, you may want to consider a whole life policy. If you can afford the higher premiums, the investment can grow over time and you will have the added benefit of “surrender value” (you get money back while you are alive) if you need the cash for an emergency.

Younger married people or those in committed relationships will definitely want to explore purchasing a simple term life policy to help support their spouse or partner in the event of death. No one wants to consider having to suddenly and radically adjust a lifestyle while trying to adjust to the loss of a loved one. If both partners are wage earners, it is even more important for each to carry insurance with the other as beneficiary. One common rule of thumb, if you can afford the premium, is to try for five times annual income in this situation. If, however, there is significant debt between the two of you such as a mortgage, you will want to obtain coverage that will take care of that debt plus leave additional money to the beneficiary. In this scenario there is no need to take out separate mortgage insurance, only more life insurance.

Once children enter the picture, it will be time to look at increasing the amount of coverage. The USDA estimates the cost for a middle class family to raise a child to the age of 18 in the United States at approximately $260,000. For upper income families or those in higher cost of living areas, the cost is proportionately greater. Add to that the costs of sending a child to college or other secondary education and you are presented with a whopping bill. There are online calculators that can help you figure out how much your children will cost to raise: simply Google “The Cost of Raising a Child”. When you are armed with that information, use that number as the amount of insurance you need and then calculate the term as the number of years it will take for your youngest child to get up and out of college. As before, if you have large debt such as a mortgage or a large income that will need to be replaced make sure to include that in your calculations.

Most life insurance agents will recommend that you examine your insurance holdings each time there is a major change in circumstance in your life: births, marriages, divorces, inheritances, and job changes with subsequent rise or fall in income. As your children grow up and leave the nest, you can begin again to start thinking about coverage simply to cover your income for your spouse or partner. If you have lots of assets by this time in your life, part of your estate plan should definitely include insurance that can help pay any additional estate taxes that may be owed when you pass away.

Absolutely the best time to purchase life insurance is when you are healthy or relatively healthy because the premiums are based not just on the dollar amount and term, but also on your health. Life insurance is sold based on the premise that the carrier collect premiums and hopes that you will not die during the term. When that happens, they make more money. The greater the chance they see that you may in fact die during the policy term, the higher the premium will be.

The good news is that if you purchase a 30 year term life insurance policy when you are perfectly healthy, and you become seriously ill for the next 29 years after signing on the dotted line, your policy should not be affected. As long as you keep making the premiums, they will stay the same and the coverage will remain in place. It becomes increasingly more difficult to find good affordable coverage the older and more sickly you become.

Consumers today have many choices when it comes to purchasing best type life insurance. The Internet can be a good source of information and quotes for simple coverage. If you have a more complicated scenario, you may want to consult with a life insurance specialist but keep in mind that they earn bigger commissions by selling bigger policies. You may have to shop around for an agent with whom you are comfortable but take your time. This is, after all, a matter of life (insurance) and death (benefits).

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