01/25/2005
How to determine… “What is the best life
insurance policy for me?”
With the current life insurance market being so
competitive these days it is often difficult to get an objective answer to
this question. One of the biggest problems someone shopping for life
insurance will often run into these days isn’t finding the best rates…it’s
the agent selling them the policy. Its no big secret that life insurance
salesman are paid via commissions, it is then simple to conclude that the
more the premium…the more he makes. So whether or not the proposal you are
considering purchasing is in your best interest is a question all
should consider before making a commitment to a life policy.
In this article I am hoping to
provide some objective information on the two major types of life insurance
so you the consumer can make a more informed decision on which policy is
right for you.
Lets start off with some simple
definitions:
Term Life Insurance- A life
insurance policy issued for a set number years or “term”, after which the
policy expires without value.
Permanent Life Insurance- A life
insurance designed to stay in force the entire life of the policyholder.
This type of policy does develop a cash value or equity based on a fixed or
fluctuating interest rate depending on what type of policy you buy.
Now were back to the question “which one is best
for me?”. The best place to start when determining this answer is you.
Your age, sex, tobacco usage, and overall health are the biggest factors to
consider. The younger and healthier you are the better your rates will
be…and statistically women live longer than men so their rates are
inevitably going to be better. So then who should buy…
Permanent Life Insurance?
·
These policies tend to work best
for the younger/healthier crowd. Why? They are more affordable for this
group and the more time you have to keep this policy in force the more
benefit one will receive from the savings element of the policy.
Term Life Insurance?
·
These policies can be used for
everyone and anything else. With term policies you are just paying for the
cost of the insurance, there is no savings or cash value involved. Term
Life insurance is a great fit if you just need coverage for a certain period
of time. For example:
o
To cover a mortgage loan
o
To cover a car loan
o
Only 11 more years until the kids
are out of school!!
o
Possibly a loan associated with a
new business venture
·
Also these policies are better for
the older crowd. Why? It’s cheaper for this crowd. Lastly, for this age
group that is interested in the savings element of a permanent life policy,
you would use the old method of “By term and invest the rest”. Put the rest
of what a Universal Life Insurance Policy premium would be into some other
type of savings product and you will typically get a better return on your
investment.
Now that your more informed about what you’re
buying remember you make the decision. Don’t be oversold buy a
hungry life salesman. Knowing what life insurance is best for you can save
and or make you money while protecting your loved ones.
Thanks for reading, and check us out for the
next article on “What to do with that old whole life insurance policy that
you have had for 20+ years?”
David Beane
CEO-North Texas Life Insurance Company
For a fair quote that meets your need visit us
on the web at:
http://www.northtexaslife.com
