FRIDAY, APRIL 22, 2011
Most of us buy insurance to protect our possessions, such as our home, car, and even our pets, but life insurance is probably the most important insurance policy you'll purchase over the course of your lifetime. The right policy helps ensure that your loved ones won't be burdened with debt when you're no longer there to care for them yourself. 
But, before you can buy life insurance, you'll have to decide what kind of life plan will be right for your family. Buying life insurance can confusing and complicated, but understanding the different types of life insurance can make it easier. There are three major types of life insurance, all of which are discussed briefly below:
>> Term Life Insurance - this is the default type of life insurance, which is purchased and paid at regular intervals with a definite termination period. When the term expires, the client must choose whether to expand the coverage to renew payments, or to throw away the coverage due to instability. Should the insured die before finishing the term, the accumulated benefits would then be paid to the beneficiary. This type of insurance is strikingly different from all other kinds of insurance, because it only offers you a limited payment term. It is nevertheless the cheapest life insurance in terms of costs to benefit ratio.
>> Whole Life Insurance - this type of life insurance does not have a limited term, but continues on and on as long as the insured is still alive, hence the term "whole life". The idea for this kind of insurance was first concocted when insurance companies were pressured to change the way term insurance policies are given. All sub-types of whole life insurance depend on the terms and agreements made between the policy holder and the insurance company. The costs involved in this type of insurance is significantly higher than term life insurance, but nevertheless it is comparatively a lot better when we look at its benefit range.
>> Universal Life Insurance - "cash preservation" is the keyword when we talk about this kind of life insurance. When payments go over the cost of insurance, the value is proportionally credited to the cash value. The cash value is then credited at regular intervals with interest. This is probably the most convenient type of insurance in terms of flexibility and the number of available benefits. In fact, this kind of insurance can even be used by the insurer, in the form of loans and cash value withdrawals.
The benefits of having a life insurance policy should be obvious. Your family won't have to worry about how to pay their bills and expenses if you contributed to the household income. The right policy should cover those expenses with some left over. A life insurance policy also reduces the financial stress that a funeral and burial can cause.
Finally, the main benefit of life insurance is peace of mind knowing that you have prepared your family for your eventual passing. Life insurance is an essential in today's world. Don't put it off until it's too late.
By Matt Reynolds - Google+
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