Many factors contribute to what kinds of life insurance a family purchases and how much is spent. Young families may peg life insurance protection as a budget must-have, to have some financial security should the primary breadwinner die prematurely. Families on a budget may want to pay their insurance premiums monthly, as the paycheck comes in. In the same vein, many factors contribute to how insurance companies establish insurance rates.
How are premium rates determined for life insurance?
As a parent or grandparent, choosing the right kind of insurance for your family’s needs is an important part of preparing for the future. There’s a feeling of security in knowing that you have enough coverage to provide your beneficiaries with adequate benefits.
Two common kinds of life insurance – term life and whole life – have advantages and disadvantages. Read on to gain insight into how each kind works.
Return of Premium Life Insurance is a combination of Term Life and Whole Life insurance. It’s similar to a Term Life policy in that you pay for coverage for a pre-selected number of years (referred to as a “term”). However, if you outlive the term of the policy, every cent you paid into the policy will be returned to you – guaranteed. The premiums are higher for life insurance with return of premium than for Term Life policies, and you can minimize your monthly premium by choosing a longer period of coverage.
You hear it in the news every day – the U.S. economy has yet to fully rebound from the “Great Recession” of 2008-2009. Although every family’s situation is different, many people are still dealing with the leaner and meaner economic realities of post-recession years.
The employment market remains tight and families feel the pressure of keeping up with the expenses of day-to-day-living. Yet family budgets need to address not only today’s demands, but also financial goals for the future.
Life insurance may sometimes seem complicated and confusing, given the many different providers, policies and coverages. It’s important to thoroughly research your options before making a choice, but – if you do your research online – it’s also important to consider the source of the information.
To help you separate fact from fiction, let’s dissect some common misconceptions: