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Consider Whether Life Insurance Is the Best Option for You

Friday, March 22nd, 2013

With the changing times in the world, future protection and security is what most people are thinking about. No one wants financial troubles but if they come, have nothing to fall back on in form of security can be disheartening. That’s why insurance is there; to make sure insurance policy holders have security. However, taking the right policy for your needs is crucial. It is best to critically analyze your situation and decide on which is best for you.

Life insurance is one of the policies asked about by many. There are three types of this life insurance policy;

  • Universal life insurance – with this policy, the premium paid annually varies depending on the terms agreed. The policy holder and the beneficiaries have flexibility in the first years of the insurance policy. For those covered in the policy will have better benefits in the case of the holder’s demise.
  • Traditional whole life insurance – this is deemed as a way of saving and the benefits are abundant. When dividends are earned, they can either be used to increase the value of the actual cash or for death benefits. You also have the option of having the cash withdrawn and you can use it for something else.
  • Variable/Flexible life insurance – this is for those who view insurance as a way of saving and adding value to the cash being given as dividends. Although the guarantees are few and the risk being taken in much more, the value benefits are high.

Now that you’re aware of the types of life insurance there are, it’s best to know the pros and cons of this type of insurance policy. This will shed a much brighter light on whether this policy is best for you or you need to get another type.

Pros

  • The time the policy has been in force, the higher the value of cash in the savings account. Since it’s a way of saving simply paying the premium and having it in your account is beneficial. Therefore, it is a great way to save.
  • This type of insurance policy has guaranteed death benefits. These include catering to burial expenses so that family can mourn without disturbance and the family having a fallback plan when the bread winner dies; the money will be used to support the family while the next responsible adult prepares to take over.
  • The life insurance policy enjoys low taxes compared to the amount the policy is worth. For the earnings received from the cash value is tax-deferred meaning tax doesn’t have to be paid.

Cons

  • The premium paid is quite high compared to other types of insurance policies offered.
  • The life insurance policy cannot be used as a form of investment. The money can only be used when the insurance policy expires.

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