Choosing the type of Life Insurance Policy

Every individual is different, so are their needs and their reasons to buy insurance. Hence it is up to each what kind of plans they wish to go for. For this choice to be made, it is also important to understand the different type of insurance plans and then choose the right one for you.

Types of insurance for your choices – Choose one that is right for you

Term Insurance: This is the basic form of Life Insurance for people who are below 50 years old. It is taken for a period of 10 years or under and each year or when the term ends, it has to be renewed. As the insured gets older, the premium amount will also increase. Term insurance will not pay you any cash benefits but in the event of the insured’s death, the benefits will be paid to the surviving family members who are included as beneficiaries in the policy.

Declining Balance Term Insurance: This is mortgage insurance and the premium doesn’t change but the face value does. Once the insured person pays of the mortgage, the insurance cease to exist.

Return of Premium Term Insurance: This insurance will pay you the amount you have been paying in premiums if you outlive the Insurance term.

Whole Life Insurance: It gives you protection for life along with cash value. A part of the premium amount is accumulated and this is the cash value of your policy. The advantage is that you may be able to borrow 90% of this cash value.

Universal Life Policy: You can change the premium amount and face value, and you can even take out the cash value, though it will mean that the death benefit is greatly reduced.

Variable Life Insurance: You get many options for investment and the premium remains fixed. You can invest the cash value in many types of plans such as bonds, stocks and others. The death benefit of the Insurance will increase or decrease as per the performance of your investment option.

Buying insurance is solely dependent on the cover you require. You should plan on what type of policy from the above you need. You can even seek the help of a professional to help you decide buy the most suitable insurance policy for you. What you should look at are your income replacement needs. If you wish basic insurance, then you should go for term insurance as they only give death benefit. If you are opting for it, then ask for a policy that can be converted to whole life insurance, in case your requirement changes in future.

Before buying any insurance, read the terms and conditions and look at the premium amount. You may choose a high premium hoping for similar benefits at the end, but if you lose your job or your income suffers a fall, then you may not be able to pay the premium later. So, choose wisely!

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