Life insurance: protect what you have

Life insurance: protect what you have:

Although insurance is not an investment, it is an important part of a solid and knowledgeable personal financial management. The insurance is the protection. Protect everything you've worked so hard to win. Send the children to the university. It holds a family together at a time when money should not be a concern.
You need insurance, but buying the right coverage to protect your family and assets is like learning a new language. Term life, whole life, universal life, real cash value, dividends, loans against policies: it is a maze of insurance products and finding the right coverage for your needs may require some research.
This is an introductory course on how to get the best at least in life insurance and still have the protection you and your family need.

Types of life insurance:


There are two basic types of life insurance with numerous variations on a subject.
Term life insurance is the easiest to understand. It is also the most economical protection you can buy.
Term life insurance is paid when the insured (you) transmits within a defined period, a defined period of time in which your life insurance coverage is valid. The term's life comes with a variety of time frames: terms of five, ten and up to thirty years are available.
The younger you are, the lower the cost of the monthly premium: the amount in dollars you pay for protection each month. Premiums are calculated based on two factors: your age (and general health) and the amount of dollar protection you need. It's simple. A $ 200,000 term life insurance policy will not cost as much as a $ 500,000 policy because it is buying less protection.
With the term of life, you keep things simple. The insurance company pays X amount of dollars to the beneficiaries when the insured person passes, as long as the policy is valid, that is, the death occurs during the term of the policy, therefore, the name of life insurance.
Term life policies do not accumulate value, you can not borrow against them, and if you choose a short-term and your health changes, you may end up paying more for your term life insurance than if you bought it long term. policy - one that will cover you in the long term.
To determine the amount of term life you need, add funeral costs, outstanding personal debt, mortgage debt, the possibility of paying tuition and other important expenses that could exhaust family resources. Calculate how much it would cost your family for a single year.
 Use the lowest factor if you do not have a lot of debt and the highest factor if you have a couple of mortgages and have three children for school. That's the amount of term life you need to protect your family and all your expectations.
The other type of insurance is whole life insurance, also called permanent insurance, universal insurance, universal variable insurance, and other product names, but all fall into the general class of coverage called whole life insurance.
The first difference between the term and the whole life is that all life covers it from the day you buy the policy until you die. Of course, this assumes that you pay your total life insurance premium every month. There is no term (period of time when coverage is valid) for a lifetime. Buy when you are young and your premiums are low and begin to accumulate cash value.
That's the other main difference between the term and the total life insurance coverage. All life pays dividends. Not much, but dividends that can be used to reduce monthly premiums, or they can be allowed to accrue interest.
Once the entire life policy has accumulated enough cash value, you can borrow against that cash value to buy a house or cover some tuition bills. The disadvantage of taking loans against the value of an entire life policy is that it reduces the payment to the family in case the insured person dies.
However, a whole life policy increases in value while providing protection to your family. The cost of coverage is also higher. Expect to pay more for $ 500K of whole life compared to $ 500K of term life insurance, simply because the insurer is paying interest on your monthly premiums.
 Do not think of the whole life as a money maker. He does not intend to increase his wealth. That is an additional benefit. An important collateral benefit, but the main reason to buy a whole life is to protect your family

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