Basic Life Insurance

Choosing the right insurance is a critical undertaking. We’re talking about money that you’re going to have to shell out regularly, in the hopes that your loved ones would be taken care of if something happens to you. With all the different kinds out there, what should you choose? There are two basic types of insurance, whole life and endowment policies. Whole life policies are life insurance contracts that will pay you a lump sum only after your death. While endowment policies are life insurance contracts that are designed to pay a lump sum after a specified term. Generally, premiums are higher for endowment policies than for whole life.
Normally, I always suggest getting an endowment policy, since I like the idea of getting my money back. I also like to look at endowments as forced savings or long-term investments. Also, with endowments, you get insurance during the critical period of your kids’ growing up years. Once they’re all grown-up and well-established, then it would be your turn to need the money for your retirement.

A whole life insurance policy builds up its cash value very slowly at first, but then, it will begin to pick up its pace after several more years, when the earnings will start to grow faster than the “mortality” cost (or the company’s cost of insuring you). It does not only protect your family, but it also allows you to save for your future.

The main advantage of a whole life policy is that you won’t have to worry about outliving it. There is also a “forced savings” component which is a cash value amount that grows tax-deferred. When you have built your cash value, you can use it for your retirement, vacation, or anything else that you want.

Whole Life Insurance is lifetime insurance. It protects your life from the time you purchase the policy till you die. You can also prepare for the financial needs of your family when you die. This type of insurance provides you not only basic insurance protection but also mortgage protection, estate preservation, retirement funding, charitable giving and business needs. After the first year, the policy starts to accumulate cash value. It can earn dividends which can fluctuate from year to year. When the insurer dies, the insurance company will pay the beneficiaries the death benefit. It is free from federal income tax.