To many, the idea of a life insurance cost may seem an unnecessary annual investment, or money more effectively spent elsewhere and to be fair, is not absolutely necessary for every individual. It is important, however, to consider the benefits that a life insurance policy may have to offer, before discounting the idea entirely. Life insurance ensures the financial security of family members and loved ones in the event of unexpected or premature death. Individuals that would benefit from such a plan include those who have recently started families or have other dependents, and have not yet accrued any substantial savings or equity.
Once having determined that life insurance is a priority, comparisons in pricing and types of insurance should be the next step. The following will discuss the differences in price, and advantages and disadvantages of several types of life insurance that can be purchased by individuals, including term, whole, and universal life insurance.
Term life insurance cost factors may include the following: A subject’s age and medical history, and the desired size of payment to selected beneficiaries in the case of death. The cost of term life insurance can also vary depending on the plan that is selected. Low cost term life insurance is most frequently attained in shorter-term policies, such as annual renewable terms. Although at face value this may seem the most cost-effective option, since during the given term an individual may pay a lower premium than with a longer term agreement, once the term is up for renewal, the rate of the previous year’s term is no longer guaranteed, and could potentially increase considerably. A more cautious option to take would be a guaranteed level premium term plan. These plans are for a longer period of time, and guarantee that the premium being paid will not increase during the course of the contract. In order to ensure these guaranteed levels, the premiums will often be higher than in shorter-term contracts.
Whole life insurance cost is set by the insurance company, based on the following factors: The premium is applied towards a fixed pay-out to beneficiaries in the case of death, while the surplus is put, by the insurance company, into an investment fund, which is tax-deferred as long as the policy is maintained. Eventually the insured will have the option of withdrawing said surplus, with the accrued interest, as they might with a savings account, in order to apply it towards their retirement.
In contrast to whole life, universal life insurance cost is determined by the insured, as is the amount to be paid out in the case of death. Interest rates on investments fluctuate more frequently in this case, as they pay a market rate of return instead of being adjusted on an annual basis, and will be higher or lower depending on the state of the market at any given time.
When researching life insurance cost, be sure to consider the length of the life insurance term, as well as the desired level of payment to beneficiaries and stability in interest rates.
Once having determined that life insurance is a priority, comparisons in pricing and types of insurance should be the next step. The following will discuss the differences in price, and advantages and disadvantages of several types of life insurance that can be purchased by individuals, including term, whole, and universal life insurance.
Term life insurance cost factors may include the following: A subject’s age and medical history, and the desired size of payment to selected beneficiaries in the case of death. The cost of term life insurance can also vary depending on the plan that is selected. Low cost term life insurance is most frequently attained in shorter-term policies, such as annual renewable terms. Although at face value this may seem the most cost-effective option, since during the given term an individual may pay a lower premium than with a longer term agreement, once the term is up for renewal, the rate of the previous year’s term is no longer guaranteed, and could potentially increase considerably. A more cautious option to take would be a guaranteed level premium term plan. These plans are for a longer period of time, and guarantee that the premium being paid will not increase during the course of the contract. In order to ensure these guaranteed levels, the premiums will often be higher than in shorter-term contracts.
Whole life insurance cost is set by the insurance company, based on the following factors: The premium is applied towards a fixed pay-out to beneficiaries in the case of death, while the surplus is put, by the insurance company, into an investment fund, which is tax-deferred as long as the policy is maintained. Eventually the insured will have the option of withdrawing said surplus, with the accrued interest, as they might with a savings account, in order to apply it towards their retirement.
In contrast to whole life, universal life insurance cost is determined by the insured, as is the amount to be paid out in the case of death. Interest rates on investments fluctuate more frequently in this case, as they pay a market rate of return instead of being adjusted on an annual basis, and will be higher or lower depending on the state of the market at any given time.
When researching life insurance cost, be sure to consider the length of the life insurance term, as well as the desired level of payment to beneficiaries and stability in interest rates.
No comments:
Post a Comment