Life insurance, as the name suggests, is an insurance cover for a specific period of time. The most important factor that you need to consider while going for any insurance policy is the premium associated with it, along with the returns that would be obtained after the specific period ends. A term life insurance policy is a budget friendly approach that results in occurrence of lower costs by the policyholder as compared to other options. The reasons for referring a term life insurance policy as a budget friendly policy is that the premiums that are associated with this policy are cheaper as compared to the policies related to cash value, irrespective of the cash value policies in the universal life insurance policy or even a whole life insurance policy. Thus, your beneficiaries would be taken care of in an effective manner when you avail a term life insurance policy. Needless to say, a low cost term life insurance policy is a must for getting the benefit of fair returns.
Time period associated with a term life insurance policy:
In general cases, the term life insurance policy is purchased for a period that may be of one year, five years or even for a period of ten years. The period (any of the above stated periods) or the duration for which it is purchased is defined as the term of the life insurance policy. A particular premium is to be paid during that term. There are three kinds of term life insurance policies, namely increasing, decreasing and level term life insurance. The kind of term life insurance that is availed results in a difference in the amount to be paid as premium. Once the term of the life insurance is over, the role of a convertible term insurance comes into play. Also, the death benefit differs according to the kind of term life insurance policy that is being availed. The convertible option can be availed when the term comes to an end and thus, it can be converted to any other policy without undergoing any kind of medical examination.
This policy works best for individuals who are not in a position to pay high premiums for their life insurance. Although the tax benefits that can be availed through this policy are not as high as in policies of whole life insurance and universal life insurance, but even then, it is a preferable policy because of its costly saving benefit. The conditions that would make you choose term life insurance policy includes your good health, your wish to incur a low cost on life insurance and your inability of affording of a high premium.
Worried about your children’s education?
Endowment life insurance is the answer to all your worries related to the education of your children. These days education has become expensive and so the result is ultimately the creation of burden in the parents’ minds. Well, endowment insurance allows parents to choose the best plan according to their financial condition and needs. These various options, however, restrict the policy holders to add as much amount as they wish to, because a specific sum can only be added in such a policy. The outcomes as expected by the families are generally high. The reason for this is that parents would demand money whenever they require it, irrespective of the conditions of the economy and the position of various stock indices. Thus, the savings need to be effective enough to avail the returns as they need them to be.
An endowment insurance policy is different from the conventional insurance policy in terms of the incurrence of the face value even when you are living. The reason for this is that in an endowment policy, you can avail the face value even when a specific period of contract comes to an end. It is thus, not necessary that your beneficiaries get the face value only when you die. The endowment life insurance policies suffer from a serious disadvantage that they have high premiums associated with them. Hence, the shorter is the period of contract that you enter into, the higher premium you are required to pay. This is the reason why it is not preferable as an effective saving option.
Be it any insurance policy, you need to consider some basic factors before opting any particular policy. The first major contributor to the success of any insurance policy is the premium associated with it. Different companies charge different premiums on the same policies, according to their will. Thus, it becomes important to do proper research of the available options to choose the best option. You also need to have an exact idea of the financial strength of the insurance company with which you are dealing. This would help you in judging the company’s suitability for you.
Always have a clear outlook towards the risk and return associated with a particular insurance policy as it would assist your long term decision making. You should sign on any particular policy’s agreement only after clearing your doubts regarding that policy. Disclosure of complete information that is relevant is necessary, especially when you are dealing with annuity and any kind of life insurance product. Another important factor to be borne in mind is the replacement of an existing policy for a new one. Insurance agents may try to cheat you by utilizing the cash value of the existing policy and using it for buying a new insurance policy. Thus, you better take care of these factors else you would lose your hard earned money. If you are going for availing the option of annuity, you need to read the terms and conditions with a special care. The returns from different policies are dependent on the tax policies also. Thus, tax is another factor that decides the suitability of a particular policy for a particular individual. Enjoy the benefits by availing the most effective policy and feel free of all worries related to a secured life.
