Determining your Life Insurance

It makes sense for cost to be a determining factor in determining your life insurance plan. The price of something is a determinant of nearly every purchase decision that we make. This is especially true when weighing the benefits of your options – which typically leads to the realization that higher price equals higher benefits.

This doesn’t necessarily ring true for life insurance policies. So why is it still so difficult to differentiate between the specific aspects of your options? This might be in part due to such a high level of responsibility that insurance carries. It must protect against a wide variety of risks all while complying with state regulations.

Oftentimes when an agent explains hypotheticals to a client, they can become dangerously broad in their descriptions. When it comes to life insurance policies, the devil is in the details. It may seem more appealing to simply go with the cheaper option, but there are many other elements to consider.

The reason most people balk at a whole life insurance policy is because of the common generalized comparison made about the two life insurance options: whole life is overly expensive and only for the rich, while term life insurance policies are painted as the sensible, cost-effective choice. These are sweeping generalizations and can’t be taken at face value. This is where basic definitions become crucial. The true difference between the two is that whole life insurance covers the risk of a person dying for the entirety of his or her life, while term life insurance only offers this protection during the years when the insured is a significant wage earner in the household.

That being said, whole life insurance does more than protect beneficiaries from the loss of the insured. The benefit paid will never decline during the insured’s lifetime, and the policy may additionally build cash value. This is why whole life policies tend to have higher premiums. For this reason, younger prospects typically find themselves leaning toward the less expensive option, or term.

Term life insurance protects for a specific period. Usually there is an age at which the term life insurance policy cuts off – often around 70. The idea is that by this point, hopefully, your family is fully self-sufficient without your income. At this age, term life insurance becomes more expensive because of such a large increase in risk factors.

Although whole life insurance does cost more over the years, in provides coverage past the age of 70 and oftentimes until the insured’s death. The point is here is that there is no right or wrong answer when it comes to life insurance. With the help of a licensed insurance agent, you can easily come to determine which is right for you and your family. Do research and seek the guidance of professionals. Insurance exists to protect from risk, so you never want to increase it by oversimplifying things.

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