What Kind of Life Insurance?

How do you choose the kind of life insurance that is most suitable for you?

Do not depend on the proposal that is handed out to you by a life insurance agent. Determine the kind of life insurance that you need.

If you are single, have no dependents and still young, the most likely reason for you to get an insurance policy is to avail of the lower premium. The younger you are, the lower is the cost of insurance and the easier it is to become insured. Eventually you have the plan of getting married and having your children. The most advisable life insurance for you will be the variable universal life insurance. It will give you the flexibility of increasing or decreasing your insurance coverage in the future. It also gives you the chance to invest in equities which will potentially earn greater yield in time. Since it is presumed that you have more cash at your disposal, you can well afford this kind of insurance.

If you are at the early stage of family life where budget is tight and you have many other financial priorities, you should get a term insurance. A lot of people at this stage tend to discount the importance of an insurance since dying seem too far off. Yet it is precisely at this stage wherein a great financial devastation can occur should the breadwinner meet an untimely death. With the big burden of financial obligations to the family, the loss of the breadwinner is truly crippling. If you care enough to insure your car, you should care enough to insure your life. It is totally irresponsible to overlook this need and simply disregard it. Other people insure themselves for the sake of getting an insurance but the coverage is miserably low that it can only actually just cover for the funeral expenses and the hospitalization bill if the untimely event should occur. There is not enough to replace the lost income, much more to cover for future needs such as the education of the children. The good thing about a term insurance is that it is very affordable and gives the maximum protection for the family. If started early enough, the premium is low and it can later be converted to a whole life policy when the family can already afford the whole life policy which offers not only protection but also savings. When converted to a whole life policy, there is no need for insurability if the coverage is the same. That is the beauty of a term insurance converted to a whole life policy.

There are also what you call riders. These are additional benefits that you can attach to your basic insurance policy. For example, a critical illness benefit is a rider which gives you a big amount of protection in case you are struck with a critical illness included in the insurance company's list. There is the more common total disability benefit which ensures premium coverage even when the insured can no longer pay for the premium because of disability. There is also the accidental death and dismemberment. Other riders are hospital income benefit rider and female benefit rider. You should ask your agent the different riders being offered by the company and choose the rider which you think you would have great need for.

Life insurance is also very useful for estate planning. High income individuals with many properties can get so much for their money by just buying an insurance instead of paying for estate taxes, donor's taxes or capital gains' tax. I believe life insurance is the 9th wonder of the world because it gives you instant cash when you need it the most and you do not even need to invest the same amount to be protected for that amount. You may wonder what the 8th wonder of the world is. It is compounding interest.