How To Find Insurance That Best Suits You

While purchasing life insurance people often tend to think that whole life and term insurance are similar policies and offer similar benefits. They are quite different from one another and the first step is to define both in their context.

Whole life insurance

This is when you can pay a fixed premium for a fixed period of time towards a fixed final settlement amount. Once you enroll for whole life insurance, it provides for permanent protection without having to renew or convert the whole life policy into some other policy type. There are certain advantages of whole life insurance:

1. The premium amount stays constant irrespective of inflation or rising costs. With term policies, the cost for the nest renewal is much higher than the last time because you have grown older. Even if your life expectancy comes down due to some illness or injury, whole life insurance guarantees that the premiums do not change.
2. The death benefits and cash values of your policy stay the same unless you withdraw cash value in the interim.
3. Whole life policies offer dividends (returns) which are exempt from taxation. These dividends may be used to enlarge your life insurance policy benefits.
4. If you need a loan, the banks accept the cash value of the policy as collateral to guarantee payback on the loan.
5. In the event that you get sued in court for some reason, the creditors cannot claim access to your life insurance policy funds.

Disadvantages

1. Premiums must be unrelentingly paid permanently. Failure to pay will result in penalties or fines.
2. Cancellation of the policy will result in a loss from the final amount.
3. The premiums are normally higher than those for term or variable life insurance policies.

Term insurance

This kind of insurance as the name suggests is for insuring fixed periods of your life and then renewing the contract for the next period- if the contract happens to be renewable one. This insurance several benefits as well as downsides to the idea. Here’s a run through of some advantages and disadvantages of term life insurance:

Benefits

• Premium costs are lower when compared to premiums of whole life insurance.
• Gives you a chance to build up some funds to leave to your beneficiaries if you have been unable to so until now.
• Breaks down the concept of life insurance into smaller and more digestible tit-bits.
• This is able to offer maximum value for life insurance at the most optimum rates possible.
• People with lower budgets and who belong to lower income groups may easily afford term insurance as opposed to permanent life insurance which may be too expensive to afford.
• The premium stays the same for the number of years that you have opted for. If your term insurance policy is for 25 years, then your premium stays the same for 25 years.
• Many companies are able to offer term life insurance that you can convert to whole life at some later date without having to prove your insurability all over again by taking medical exams etc. If you convert, the company might offer a good rate to take on a whole life policy as you are already insured with them.

Disadvantages of term life insurance

• Every time you decide to renew your term, the higher will be your premium based on the fact that you have grown older since then and are more likely to die.
• In the event that you decide to convert your term life policy to a whole life policy, your premium levels will be much higher than for an individual who has been with the whole life policy all through. The rates are higher for the same rate of coverage.
• The companies usually do not guarantee that you will qualify for term insurance for the next period. If your health is not in good condition or it has deteriorated since the last time you purchased a policy, you may not be considered eligible for renewal of the policy.

How to shop online when you want to invest in term insurance

The internet is the best place to begin looking for information on term life insurance policies, quotes, advice and tips. While searching online to locate a company that offers what you want, you might want to remember that there are essentially four types of companies on the internet that offer insurance:

1. The first type are those that freely allow you to access data from their databases as far as quotes are concerned and if you are interested in pursuing a quote that looks reasonable, then they will give you the details you want. This is the kind that works the best. They offer you an upfront service without any strings attached.
2. These sites will request you to enter your contact details like name and email address. We are so used to giving our email address out that most of us would just enter it without thinking twice. Then they leak these details to insurance companies who will then send begin sending promotional material to your email address, their rates, policies etc.
3. The third type asks you for your contact details in order to directly quote you insurance rates. They do not sneak off your details to anyone else.
4. Company websites where you can get direct quotes based on your requirements. Or they might refer to one of their insurance agents who will work out a rate for you.

Of all these, type 2 should be best avoided as you might end up getting bombarded with quotes and material that you had never asked for in the first place. The best thing to do after getting a quote from a real company (you want to deal with real people) is visit them and see what they are all about. The website is fine for initial contact but after that you would want to know more about them.