How to Shop for Whole Life Insurance
by: liquidgraph
Life insurance comes in two basic types: permanent and term. Permanent insurance is when the policy holder has lifelong protection as long as they continue to pay their premiums. The policy’s beneficiaries receive a payment when the person dies. Term life insurance means that a person is only covered for life insurance for a specific length of time. Usually this is ten, twenty, or thirty years. People select term life insurance if they have a cost that will eventually go away – such as education fees or a mortgage payment.
Permanent insurance is also called cash value insurance because the policy builds up a cash value over time. If the policy holder cancels the contract before their death, the amount available to them is the cash value. Cash value insurance comes in the form of whole life, where a savings account portion grows at a fixed rate, and variable life, where the policy holder can choose different investment options.
Whole life insurance plans are in general more complicated than term life which means the process of finding the right one is more involved; interest rates and other factors must be considered. The best way to start looking for a policy is to become familiar with all of the common terms and procedures. It is also important to understand the purchaser’s budget, coverage needs, and any additional policy benefits that may be required.
The reason that whole life plans are more complicated than term plans is that with whole life insurance, the issuing company will have to make a payout at some point. Term life insurance, on the other hand, provides only a basic death benefit without savings or investment components. There is actually only a small chance that the issuing company will have to pay out on a term policy. Whole life insurance is an investment plan for the person’s beneficiaries or even him or her self.
When comparing whole life policies, it is important to look for extra benefits that may be available. For example, an insurance company may allow loans to be taken out against the policy. Although the policyholder will have to pay interest to pay back any loan that they take out, the interest is usually lower than a traditional bank loan because the person is actually borrowing their own money.
An investor should also consider the options on a policy and investigate any discounts that may be available to them. For example, some insurers offer a premium return option where if a plan has a higher growth than expected, the company will return a portion of the premium to the policyholder. Also, some firms offer discounts for spouses and offer multi-policy deals if homeowner’s insurance or car insurance are also taken out with the company.
The most important thing to remember when looking for whole life insurance is to do the full research and to shop around. The easiest way to do this is online. Multiple policies can be compared quickly in the privacy of one’s home. Also the financial ratings of the insurance companies can be easily found online to ensure that the person is buying a policy from a company that is in good financial health.
admin | 
January 16, 2010 10:30 am
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