The Various Types Of Life Insurance Part 1 Of 2

Life insurance can be a confusing topic, especially for people that do not like to think about their ultimate demise, let alone talk about something as morbid as death. However, it is incredibly important to protect your loved ones, from a financial standpoint, just in case you do happen to die suddenly. Having the correct life insurance policy in place will accomplish that. The good news is once you have set it up, it is not something that you have to think about on a frequent basis.

All you really need to do is simply pay the bill when it is due, live your life, and sleep well at night knowing that your family will not face financial ruin upon your passing. That being stated, it is also important to know a bit about what you are getting into when purchasing a policy. As mentioned above, it can be a confusing topic unless it is properly explained.  So without further ado, the following information will teach you about the various types of life insurance.

Term Life Insurance

Term life insurance is the most popular types of life insurance available on the market. This is due to the fact that it is fairly simple and typically the most affordable choice that you can purchase. This type of life insurance does one thing and one thing only. The bottom line is that it pays the people you choose a fixed amount of money if you die. However, the term life insurance policy is not worth anything unless you do happen to die during the term.

In essence, you are paying the insurance company to assume the financial risk of your death during the period of time that the policy is in effect. The typical terms are typically 10 years, 15 years, 20 years, and 30 years. Here is an example of how it works. If you purchase a 10-year term life insurance policy with $250,000 coverage, you will make monthly payments for ten years. If you happen to die within those ten years, the insurance company will issue a check to your loved one in the amount of $250,000. This is known as the death benefit.

However, if you live longer than the ten years, the policy ends. The good news is you have outlived the policy. The bad news is that you need new life insurance coverage. That is why most consumers choose a longer term from the start, such as 20 or 30 years. The cost of the policy increases for longer terms. So a 10-year policy will cost you less than a 30-year policy. The other factor that determines the price you pay for the policy is the payout. It is highly recommended that you purchase a term life insurance policy that is 10-12 times your annual income.

If something happens to you, the death benefit will go a long way in replacing your income for the long term. Although a term life insurance policy is the most cost effective manner in which to protect your loved ones, the other types of life insurance plans provide additional benefits.

….To Be Continued….

It is important to fully understand exactly what you are buying when it comes to insurance policies. If you have any questions, please call (508) 831-0133 to contact an associate at Zawada Insurance. We are happy to walk you through the details of your insurance policies and explain your coverage options. We look forward to helping you with all of your personal and or business related insurance needs now and in the future.

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