Low Cost Life Insurance

The Ease and Affordability of Low Cost Life Insurance

Numerous studies that have reported that 40% of Americans do not have life insurance; a disappointing statistic considering there are several low cost life insurance options one can consider.

In order to protect your family when you are gone, it is crucial to research the different life insurance options that are available. You may be surprised at how many insurance companies offer low cost life insurance.

What Happens If You Do Not Have Life Insurance?

Studies have reported that 25% of all widows felt that their spouse did not have an adequate amount of life insurance. Many of these widows were forced to dramatically change their lifestyles due to lack of funding once their spouse had passed. Some had to take on second, or even third jobs in order to get by.

If you do not have an adequate life insurance policy, your family will be left with no other option than to borrow money, withdraw money from investment or savings accounts, or move from their home in search of lower cost housing. All of this can be prevented by having a low cost life insurance policy that with an affordable monthly premium.

The Most Popular Type of Low Cost Life Insurance

The most popular form of low cost life insurance is term life insurance. Term life insurance is the most affordable and easy to understand type of life insurance. Term life insurance generally provides protection at affordable rates, as long as the monthly premiums are paid.

The length of time that one has to pay the monthly premiums can vary from a period of ten to thirty years. One of the greatest benefits of having term life insurance is that the rates do not increase during the specified period of time. There are several different types of life insurance policies that are considered to be term life insurance.

Every day, thousands of Americans are faced with the problem of not having enough life insurance. Many of these Americans may have to take on extra work, declare bankruptcy, or change their entire lifestyle. Low cost life insurance is one of the best security blankets that ensures your family’s long term financial security.

Compare Insurance Plans Before Buying

Few years back there was only one Life Insurance Company and few general insurance companies. Today there are more than 20+ Life Insurance companies operating in India and few more are about to come.

Though the purpose of Insurance remains the same, every Insurance company has something different to offer. It is very difficult to compare Policies from all the Insurance companies. It is relatively easy to get quotes from at least three Insurance companies and compare there products.

The following considerations should be kept in mind before choosing a Insurance Company.

• The background of the promoters and its joint venture partners.
• Number of years into Insurance.
• How good is the company in claim settlement.
• Service and friendly work force.
• Use of technology.

Benefits of getting quote’s from different companies.

• You can choose the best suited product according to your own needs.
• Chances are that you get the best pricing for the product you choose which can bring down your cost.
• By comparing offers from different companies you insure that you have not bought a inferior product from the market place.
• You get a clear idea of past performance such as bonus declared or returns given in case of Unit Linked Plans (ULIP’s).

Finding Participating Life Insurance

What kind of insurance would best suit you? The answer depends on what you want out of your policy, as well as other factors such as your age, whether you have a partner or spouse, and whether you have children.

For some people, whole life insurance, which offers a range of benefits over term life insurance, is a great option. And if you choose to buy whole life insurance, then you can take advantage of features such as policyholder dividends. Whole life insurance policies that offer dividends are also known as participating life insurance.

How does participating life insurance work?

Participating life insurance policies are whole life policies that include a feature called dividends. When you pay your premiums for a participating life policy, a portion is deposited into an interest-bearing, tax-deferred account. These funds appreciate in value, generating a cash surplus that can be returned to you as dividends. If you receive dividends from your policy, the money is tax-free (up to the amount that you paid in premiums), because it is considered a return of premiums you have previously paid.

One important thing to note about dividends is that you won't receive the same amount of dividends in each year, and in some years you may receive none at all. This is because the amount of dividends you receive from a participating life insurance policy depends on the rate of return on the money you have invested. Even so, a participating life insurance policy is an excellent option, with the benefits of whole life insurance, as well as the occasional extra cash dividend!

Life Insurance

Why should I buy life insurance?

We all need life insurance. But what is the difference between one policy and another? How much do we need? When should we buy? Here are a few things to consider:

Replacement of income: If people depend on your income, life insurance can replace that money for them if you die. The most commonly recognized case of this is parents with young children. However, it can also apply to couples in which the survivor would be financially stricken by the income lost through the death of a spouse.

Pay final expenses: Life insurance can pay your funeral and burial costs, probate and other estate administration costs, debts and medical expenses not covered by health insurance.

Inheritance: Create an inheritance for your heirs even if you have no other assets to pass on. Your survivors can create an inheritance by buying a life insurance policy and naming themselves as beneficiaries.

Create a source of savings: Some types of life insurance create a cash value that, if not paid out as a death benefit, this policy can be borrowed or withdrawn on the owner's request.

Charitable contributions: By making a charity the beneficiary of your life insurance, you can make a much larger contribution than if you donated the cash equivalent of the policy's premiums.

How much life insurance do I need?

First, in determining how much life insurance you need, plan for expenses that arise at death. These include the funeral costs, taxes and administrative costs associated with "winding up" an estate and passing property to heirs. At a minimum, plan for $15,000.

If you have dependents, you may want to consider buying enough life insurance so that, when combined with other sources of income, it will replace the income you now generate for them, plus enough to offset any additional expenses they will incur to replace services you provide. You should also consider planning to replace "hidden income" that would be lost at death. Hidden income is income that you receive through your employment but that isn't part of your gross wages. It includes things like your employer's health insurance premium, the matching contribution to your 401(k) plan, and many other "perks," large and small.

What are the principal types of life insurance?

There are two major types of life insurance, Term and Whole life. Whole life, sometimes called permanent life insurance encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life. Today, about 6.4 million individual life insurance policies bought are term and about 7.1 million are whole life.

What is a beneficiary?

A beneficiary is the person or entity you name in a life insurance policy to receive the death benefit.

Two "levels" of beneficiaries
Your life insurance policy should have both "primary" and "contingent" beneficiaries. The primary beneficiary gets the death benefits if he or she can be found after your death. Contingent beneficiaries get the death benefits if the primary beneficiary can't be found. If no primary or contingent beneficiaries can be found, the death benefit will be paid to your estate.