Life Insurance Policy Options - By: shay

Protecting your family is the most important thing any person can plan for during his or her life. Life insurance protects you and your family from economic hardship as a result of death.
Also an important thing to do as a parent is to make sure the welfare of your children are taken care of in the event of your death.

There are several different Life insurance policies to choose from. First you need to decide is how much coverage you might need.

1. Can your family afford to pay off your mortgage loan or your rent if you die?
2. How much debt will you leave behind to include credit card balances, car loans, student loans, personal loans etc.?
3.How much annual income will your death remove from your household?
4.How much will the funeral you desire cost?

Once you have resolved all aspects of your financial needs then you decide how much life insurance coverage you will need. Usually it works out to be about one and half times your yearly salary. Remember to take into consideration if you already have a 401K, CD’s, stock, bonds, or mutual fund accounts either with you work or set aside for a nest egg.
There basically are four types of Life Insurance that can meet your needs.

Term Life Insurance:

This type of life insurance is the least expensive and the easiest of life insurance policies. This life insurance policy does not accumulate any cash value, and is fixed on the time period it covers. Usually from 1 to 30 years which can be renewed. It pays the beneficiary of your policy a fixed amount if you pass within the time frame of your policy.

Whole Life Insurance:

This type of life insurance does accrue a cash value. The cash value usually adds up over time and has a tax-deferred basis. This type of life insurance is more acceptable to someone who wants to have a nest egg, as they grow older because it does have the cash value aspect to it. So you can use some of the cash value if necessary before you die for your children’s education or any other need that might come up.

Universal Life Insurance:

This type if life insurance is a very flexible policy and it builds up interest. The death benefits and premiums can be adjusted according to your life situations. Your policy will stay in effect as long as your cash value can cover the cost of your policy.

Variable Life Insurance:

This type of life insurance is for someone who want have his or her life insurance policy coincide with the financial market. You can decide how much you want to invest your in policy; therefore your cash value can grow faster. But if the market is bad then your death benefits will be bad.

About the Author

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