Affordable Insurance Life

The kind of life insurance a person or a family needs depends upon a number of factors. The age of the insured, the primary reason for the insurance, the time period it is needed, and the health of the insured all enter into the decision of which kind of insurance to buy. A young couple with their first baby will have entirely different insurance needs than a bachelor who is a forty year old smoker or a sky diving enthusiast. An octogenarian may need no insurance at all, if over his or her lifespan, so much independent wealth has been accumulated that insurance is not a priority.

The types of life insurance include term, whole life, and universal. Of these three forms, term insurance is the lowest priced. The low price is due to its limited time period. Generally, term life insurance lasts for a specified number of years, from one to 20 years. On rare occasions, term life insurance can be obtained that runs for 30 years. At the end of the stated time period of the term life insurance, the policy expires or may be renewed at a much greater price. The term life insurance plan pays only if the insured dies within the time frame of the policy, and if that death does not occur before the expiration date, then nothing is paid at all. However, the term life insurance plan can be converted to a universal plan at the end of the term, but at a dramatically higher monthly premium. Many financial planners advise that young couples with children buy term life insurance, that will cover them until they reach their late forties or fifties. At that time, when they have reached higher income levels, they can buy whole life insurance, sometimes called permanent life insurance.

Whole life insurance is designed to be in force for a person’s whole lifetime, thus the name. Whole life policies require greater information regarding the insured’s health and health background. Whole life insurance comes with higher premiums, because it is intended to cover indefinitely, unless the insured cancels the policy. Unlike term life insurance, whole life insurance builds a cash value that may be accessed by the policy holder by taking a loan against it. The growth of cash value of the whole life policy can be used to even pay the premiums in the later years of the policy, when there is enough reserve to do so. Customarily, a whole life policy endows at age 100, at which the insured may withdraw all the accumulated cash value. With the increasing number of individuals who reach 100 years old each year, this is entirely within the realm of possibility.

A third kind of life insurance policy is the Universal Life Policy. This type is a blend of term and whole life characteristics. Universal life policies include a separate savings account that earns interest and is used to pay the premiums on the policy. The cost of Universal life insurance is midway between that of term insurance and whole life insurance. It is thus the moderate choice for many people, and has the benefit of the savings used to cover premiums as the policy matures. There have been instances where the accumulated savings is such that the premiums need no longer be paid out of the insured’s pocket, but can be paid from the savings fund for the remainder of the policy. Thus the insured receives the benefit of insurance without paying any further.

Beyond the considerations related to these three forms of life insurance, and the affordability of each for individuals and families in differing circumstances, are considerations related to reducing the cost of life insurance through life choices. Such choices as keeping one’s weight within an acceptable range, exercising regularly, being moderate in the use of alcohol, and choosing not to smoke all play an important part in reducing the cost of life insurance. Insurance companies offer lower premiums to non-smokers, non-obese, and generally healthier individuals. Therefore, if affordability is important, then it would be best to maximize one’s health. With a foundation of good health and lifestyle habits, insurance can be reduced at the outset. Then, the choice of which form of insurance can be made with the focus on which will serve the purposes intended for the best price