Personal Finance Blog Rotating Header Image

Life Insurance

Ten tips for life insurance buyers

Before you decide on buying life insurance you should definitely do research and know some tips. You have to realize that a certain amount that you or your beneficiary get at a certain time in or after your life and how much your payments are, are not the most important things when it comes to deciding on life insurance. The first thing you have to learn is to distinguish between the different types of life insurance that are available to you.

You can basically put all possible life insurance policies into two different categories. It is important that you look at all the pros and cons of whole life insurance as well as those of term life insurance. If life insurance is important to you at this time in life but might not be as important if you make it to a later stage of life than it could be term life insurance that you are looking for. Many new family men feel safer knowing that their funeral will not be a devastating financial disaster if they come to die unexpectedly. If they do not die within the term of the policy they have lost the payments they have made, but they are still alive. By paying higher premiums you might be able to qualify for a term insurance that will give you the money from the premiums back at the end of the term.

Tips for life insurance

Whole life insurance is based on a very different idea. This life insurance is not for a limited time period and can go on for a very long time. The idea is that you are building up cash. Expectations are that your beneficiary will get a nice sum of money upon your passing. One feature of whole life insurance that is seen by many as a major pro is the cash value possibility. In other words, if you have been paying for whole life insurance since you were twenty and you are looking into buying a house when you are forty five, you might have money for a down payment right there. Keep in mind however that if you take money out of your whole life insurance under the term “cash value” it basically means that you are taking out a loan. And any loan needs to be repaid. Companies who make this feature possible do this because they have an advantage by doing so. In other words they make money on you. You will pay interest on the loan and you either pay the money back to it or if it never comes that far the money will be taken out of the money that goes to your beneficiary, including the interest.

For many the “cash value” term does the trick and helps decide. After all, this is a nice and easy way to have money available when the need appears. This is a possible loan that does not require a credit check. You have to keep in mind however that you pay a lot of money for this possibility every time you pay a premium. If you look at the financial overall of both deals it will become clear that term life is the cheapest form of life insurance.

Is life insurance really needed?

While many people preach that life insurance is a necessity of adult life, there are also plenty believers of the opposite. Either way, this is definitely an issue worth considering at the different stages of life. We all should evaluate all pros and cons and relating them to the situation we are in at that particular time and circumstances of our life. If life insurance is absolutely appalling to you than it is probably a good idea to check out what your alternatives are that ensure that your passing will not be an extreme burden to the loved ones you leave behind.

The alternative that is probably the oldest solution to the problem is making sure that upon your passing your wife and children will be added to your brothers’ family. In other words, when you die your wife becomes wife number two (or three, or four…) of your brother and she is taken care of in this arranged marriage. This is not a joke. It has been done in several cultures, but is that how you see life after you for your family?

Joke related to life insurance

You can also decide to start saving diligently early on in your adult life and take the risk that you won’t have much money saved up if you happen to pass at a young age. While this definitely works for those among us that do not run into a lot of bad luck and live to be very old, you do not know what your lifespan is going to be or what all is going to happen to you in your lifetime. If you want security for your loved ones right from the day that this idea pops into your mind than saving alone is not going to be the assuring solution you were looking for.

Again another strategy can be very motivating. If you buy a house early on in your adult life and have the stipulation in the mortgage paperwork that the house is completely paid for if you or your wife happen to pass away before the end of the mortgage is in sight, than you can consider that in some way an alternative in how to take care of your loved ones if anything happens to you. Even though this will not help pay your final expenses, left behind family members will not have to worry about a house payment or rent anymore and that is an important part of a paycheck for many among us.