There are many different types of life insurance policies to suit the needs of individuals, and rates may vary widely depending on the amount and type of policy a consumer buys. Term life insurance is cheap and affordable for almost everyone, paying a death benefit without building a cash value; meanwhile permanent life policies are more expensive depending on your budget and income, but accrue cash value and may be used as an investment for retirement. However, you wouldn’t know that before purchasing a policy unless you compare life insurance quotes online.
Determining which policy to purchase, how much of a death benefit you need, the cost, policy options and riders, and which insurance company to buy from requires online research. Like any other product or service, consumers need to shop around for free, instant life insurance quotes to compare rates, policies, and carriers to find the best coverage for their needs.
Term Life Insurance
Term life insurance is temporary insurance and is the cheapest and most popular type purchased. There are many different term plans available, each addressing a specific need for the applicant and family.
A term life policy pays a death benefit, also known as the face value of the coverage, if the policyholder dies within the term specified on the policy. If the insured lives beyond the expiration of the policy or the policy lapses due to default or lack of payment, the company does not pay the death benefit.
Term life insurance does not build cash value and is not used as an investment. Term coverage is usually issued for 5, 10, 15, 20, 25, or 30 years, and the longer the term, the higher the premium rates. Rates are based on the age and health of the insured over the entire term of the policy, and purchasing a policy young is one way to get the cheapest rates.
Consumers are able to compare life insurance right from home, ranging from level term, mortgage, and final expense to decreasing term, guaranteed, and no medical exam coverage.
Whole Life Insurance
Whole life insurance is the more expensive type of coverage because it is permanent and the death benefit is guaranteed to be paid as long as the policy premiums are current. Whole life insurance rates are higher than term rates because part of the premiums are diverted to a savings account and the policy builds cash value, making it an excellent tool for financial and estate planning.
Whole life as an investment is safe and reliable. Interest and dividends are paid on the cash value of the policy and the cash value can be used as collateral for a no interest loan, down payment on a home, or the money can be pulled out at any time for your use.
Whole premiums, similar to level term life insurance, remain the same over the insured person’s life. Though whole life is more expensive, it does offer additional benefits term life does not.
In a term vs. whole life insurance comparison, families who can afford a permanent policy and want the cash value feature to build a nest egg for retirement may prefer to purchase whole life over term.
Universal Life Insurance
Universal life insurance is also permanent, similar to whole coverage, but with an investment feature instead of a savings component. The premiums are flexible with a minimum and maximum payment instead of fixed premiums.
An online comparison will show that universal life has cheaper rates than whole life because the amount of the death benefit is tied to the success of the investments, with no guarantees.
Universal life insurance as an investment can yield high returns or losses with fluctuations, since the cash value is invested in the stock market, including equities, bonds, commodities, and currencies.
With whole insurance, the death benefit is a fixed amount stated in the policy. Depending on your investments, universal coverage can be high risk, high reward while offering the benefits of insurance protection.
How Much Life Insurance Do I Need?
Choosing a death benefit is one of the more difficult decisions a policyholder needs to make. Agents and experts typically recommend 5 to 10 times your annual pre-tax, or gross, income, depending on your family’s debts and liabilities.
Some financial advisers will base your death benefit amount on your age, suggesting that 20-30 year olds get 20 times their income, 30-40 year olds buy 15 times, 40-50 purchase 12 times, 50-60 buy 10 times, and 60-70 purchase 5 times. Home mortgages, business and personal loans, credit card and daily living expenses, medical bills, and college tuition for dependents can all skew the amount you need to buy towards the higher end of that range.
Insurance quotes can help consumers answer the question “how much life insurance do I need” by allowing them to compare different types of policies and death benefits and determine the amount of coverage they can comfortably afford.
The best coverage will be low cost in order to avoid financially crippling you while you enjoy your life, but still provide you and your family enough life insurance in case of a tragedy.
Free quotes are available online and consumers can compare the rates and coverage of different types of life insurance from multiple carriers; a consumer simply enters their zip code, completes a brief questionnaire that asks for age, gender, general health and medical history.
Life insurance quotes are available in an instant, and can help individuals decide which kind meets their needs while remaining affordable. If you have no idea what your costs may be, a free cost comparison online may be the easiest way for you to figure out your potential premiums.
Lastly, agents and brokers are usually paid a commission which is added to the cost of the policy. Buying or just comparing life insurance quotes online eliminates the agent’s fee and helps consumers get lower rates. By taking the time to research and compare policy options, individuals can find the perfect protection for their families.