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I am having trouble understanding the different types of Life Insurance.?

Question : I am having trouble understanding the different types of Life Insurance.?
My husbavd and I have been married for 5 years.I have started looking into life insurance now that we are on our feet. I am SO confused about term life insurance and “non” term life insurance. My husband doesn’t want to deal with it because he “doesn’t believe” in it. I am under the impression that life insurance helps to cover funeral costs and some of the other expenses that the spouse had prior to death. I have looked all over the internet and seem to get more confused as I try to piece this together. Can anyone tell me what I should be considering when researching policies?
types of life insurance

Best answer:

Answer by Just Me
Hi, i’ll attempt to give you some explanation in brief, not the textbook kind, so i hope it’s easier to comprehend.

Term insurance – you get $ 0 back when it ends or you stop paying for it. Maximum coverage for Minimum amount, though no cash value. death is the basic covered incident, though there are some other things such as accident covered.

Life insurance – You get cash value back when it matures or when you decide to terminate it(provided it has accumulated enough value). Comparatively, because this gives you “money back” guarantee either when you die or policy matures, the protection value isn’t as high, when compared to term insurance. Basically covers death, though you can add some other protection onto it. the maturity is usually long, in my country it can be from 80+ to 90+, depending on the companies. However, usually by 70+ the cash value is more than the total amount you paid for, with interests and bonuses.

Endowment policy – more for saving purposes, although almost the same as life insurance, but it matures way earlier than life policies. say, 20 – 30 years?

Participating Life insurance – same as life policies, but the values of participating insurances could potentially go up or decrease, because your premiums are used to participate in the company’s investment activities. usually regulated to not participate in investments those that are too risky.

Critical Illness – usually comes as a “rider” to the main policies, though it can be a standalone policy. You choose the diseases to cover, and when it strikes, you get the full insured amount, even without death occuring. It has no cash value of its own usually, ie, its a sort of term insurance.

Accident riders – usually a “rider” too, this protects you against accidents. If you get injured by an accident and are unavailable to work, what happens to your living and medical expenses? life insurance doesnt pay, because you’re still alive. this is when accident protection helps. Term insurance in cash value.

These are the basic, details varies among insurance companies.

If you’re working and can afford like only enough to survive each month, a term insurance is crucial to ensure the loved ones have enough to sustain their life when the breadwinner passes on.
if you’re saving, consider endowment, it’s better to save with them than with banks, unless the interest is justified by the banks in your country.
if you have enough to last you comfortably each month, consider a life policy. even if nothing happens, you would be considerate in leaving your legacy with a sum of money, as well as an amount to see you through retirement.
if you’re expecting a new member into your family, consider really protecting the breadwinners of the family. consider getting an endowment for the child starting age 0, when he/she is 21 or so the money would be useful for the education. Also, when the child is young protection is cheap, and easier. what if the child at an older age has some illnesses? it would be hard for the child to get protection by then.

I totally disagree with no insurance of any form. It is superfical to think that way.

Comparatively, the 3 main forms of insurance at a glance:
Endowment – Highest savings, lowest in protection, medium period
Life insurance – Medium savings, medium protection, longest period
Term insurance – Lowest savings($ 0), highest protection, can typically last till age 60. Term is not worth carrying on for prolonged periods, its only best for the short term. (costs doesnt justify it in the long run)

Again i must warn you, every insurance company has their differences here and there in terms of coverage and features, even for the most traditional life insurance.

Be sure to look for a trustworthy insurance agent from a reputable company. best if it’s recommended by close friends, or he/she is truly sincere in helping you, more than for the commission. i know of agents who’re so “professional”, yet take for granted the clients understand what they’re saying, when the clients dont, and what they’re proposing isn’t the best for them neither. And they dont go into details with the paperwork or research.

A good agent considers all your situations, recommends policies to suit your needs, a bad agent doesnt really bother with the details, recommends policies by just the first few sentences you said, and twists your needs. be sure to discern between them.

This entry was posted by admin on September 3, 2010 at 7:53 pm, and is filed under Insurance. Follow any responses to this post through RSS 2.0.You can leave a response or trackback from your own site.

Comments (6)
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#1 written by queenofqueens 1 year ago

please try this http://www.tkqlhce.com/click-1748196-10426323
please click “2insure4less” on the left top for main menu after u reach the page

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#2 written by Mark S 1 year ago

Wow! Talk about being more confused. There is some logic here but you have to sift through a lot of info to get at the bones. Well, here goes:
Term insurance is true insurance. If you pay your premiums and, unfortunately pass away in the term covered, your survivors will be paid the face amount of the policy. Like someone else said, if you stop paying premiums or the insurance is not renewed, the coverage stops.
Whole life- insurance with a built in savings. There are different types- whole life, universal, variable or variable universal. All these do the same thing, provide survivors an amount of money if the owner passes away and sets up an automatic savings plan built into the policy. However, there are FIVE RULES to them. 1) In the first two years you have NO savings, could be a little longer but usually it is in the first two years. 2) You will earn between 1-4% on what is in the savings. 3) Should you want to take a loan out on the savings, You have to pay the company 6-8% interest on your OWN money. 4) The company can make you wait for up to 6 months to receive your money. Imagine, you can have your money in your bank earning the same rate but if YOU want it you can get it, free of charge, any time you want. 5) Last but not least, your survivors choose to receive either the face amount of the policy OR the cash value. Cash value is almost certainly way less than the face value. If the owner chooses to have survivors receive both, that person WILL be paying more in premiums for this option, otherwise, ALL the money in the cash value goes to the Company.

As for deciding how much to get, ask yourself these questions:
a) Do I want all debt to be paid off? b) Do I want my income replaced? If so, for how long? c) Do I want my mortgage paid off? d) Do I want to have my childrens education paid for? Lastly, do you want your funeral paid for (about $ 6500- 8000 will take care of that, less to be cremated).

It is actually understandable why your husband doesn’t “believe” in this. You have to accept your mortality. You have to look death in the eyes when you plan for protection with life insurance. The only lives you are insuring is your families. Ask him if he feels comfortable knowing that if he passes away, you will be struggling to do everything by yourself that he now helps you with? Ask him if he would like to struggle if you were to pass away? List the things you do around the house and if you work. Then show him on paper what he would have to begin thinking about RIGHT after you passed away. Then say that it is the same thing if he passes.

I hope this helps. Remember, life insurance and savings should be kept separate. You can find mutual funds that do better than what any cash value can do for you.

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#3 written by PJ 1 year ago

If this is really stressing you out do the following:

Go to an insurance proffessional in your area.
Tell them you want term insurance that is convertable.
Get a 10 or 20 yr term for 10 times your income.

Here is the hard part. Now that you are not stressed about the decision, spend some time doing some research and making a plan. Most people buy the insurance and forget about it as they have already made the decision. Learn about life insurance and what it does when you are not stressing about it. You can always change your mind!

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#4 written by mbrcatz17 1 year ago

Well, FIRST what you do, is decide what you want it to do for you. For ME, I want it to pay for childcare while my husband works, and a housekeeper (because the man can’t cook), and put my kids through college. After the kids are grown, we don’t need the college or the daycare, and he can learn to cook for himself. So MY life insurance need is a temporary one.

TERM insurance best suits my needs.

FIRST write down your needs. THEN find a local agent or two willing to get you a buncha quotes, and sit down and talk to you. If you go to your house or car insurance agent, he’ll be more willing to look at a variety of products, and less determined to sell you a specific type of insurance.

Keep in mind, if INVESTING is part of the goal, life insurance is NOT a good investment product. There are less expensive things out there, with better returns. So if someone tries to “change your goals” and sell you an investment policy, try a different agent.

Be sure you buy your policy from a company financially strong – AM Best rated A- or better.

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#5 written by SoCal Lady 1 year ago

The previous answer was really good but I’m going to try to make it a little less confusing.
Term life insurance- you buy it for a specific period of time usually 5-30 years, it does not build any cash value but covers you for the face value of the policy.It does cost the least to purchase.
Whole life insurance or” non term “costs quite a bit more but does build cash value and at a certain point is “paid-up” meaning that it is still in effect but you no longer have to make payments on the policy but that point takes a long time to achieve. What to consider??
How old are the two of you ?
Do you have or plan to have children?
Do you both work?
How much can you realistically afford in premiums?
Life insurance is to protect and provide for the surviving spouse and or children from financial hardship if one or both of you die.
As far as hubby “not beliving” in it do you insure you car &/or home, chances are you home won’t burn down and you may not get hit my anyone but everyone does die. Doesn’t he want to protect you and anyone else who relies on him??
Ask friends or family for a good agent, they are worth their weight in gold(a good one).

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#6 written by Jess 1 year ago

Maybe you can try below website to get the information you need. It’s about insurance quote articles including life insurance for your second opinion.

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