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What Types Of Life Insurance Are Available Today?

Insurance is just a fact of life. Everybody needs some sort insurance almost universally. The problem is, that insurance is incredibly difficult to understand and very confusing to almost everybody.

In this article today I’m going to spend a few minutes explaining the different types of basic life insurance that are available to you today. You may need some of these types of insurance, and you may not need them all, or at all; but it’s still a good idea to understand what is out there no matter what. If you understand what options you have when it comes to insurance, even if you don’t need them today, you may need them later on so it’s a good idea to know what your options are.

I’m going to skip the most obvious types of insurance and focus on life-insurance because I find that many people don’t understand what life-insurance is or why you should have it. The fact of the matter is, nearly every adult needs life-insurance of some sort, especially if they have a family that depends on them for support.

There are basically two types of life insurance. In the first type, you pay a certain amount every month and the policy acts very much like a savings account. Then if something happens to you, say if you die, your family gets that money back but no more. So if over the years you have paid in $7,000 into your life insurance policy, then you get back $7,000 plus interest upon your death. This kind of a policy is usually called a whole life policy.

The other type of life insurance policy is called a term life policy. In a term life policy you basically buy a certain benefit… say $1 million. Then every month, or every quarter you pay a certain premium. If you stop paying the premium, you lose your life insurance policy and you no longer get the million dollars if you die. On the other hand, if you open up a million-dollar term life insurance policy tomorrow, pay your first month’s premium, and then die the next day; your family will usually receive the full $1 million.

Most people are going to want to go with a term life insurance policy as opposed to whole life insurance policy because they are generally cheaper and the benefit is potentially larger. Whole life insurance policies are more like investments for wealthy people, and unless you have a considerable net worth you’re much better off going with the term life insurance policy.

Why do you need a life insurance policy? Quite simply, to take care of your family after you’re gone. These days more and more we are seeing families where both parents work, both the male and female spouse in their own full-time profession. Because of this many people think that they can get away without life insurance. After all, if one of the spouses dies the other one still has their job and can still support the family.

The problem with this logic is that families get used to a certain lifestyle and all of sudden half of their income has disappeared. Their lifestyle is going to be dramatically altered forever. Maybe with both spouses working you are able to save enough for your children’s college funds, but maybe now with only one spouse left you might not be able to maintain the same savings level and your children therefore may not be able to attend college.

It’s these sort of things that you have to think about and then come to realize that just about everybody really does need life insurance. And heaven forbid that both spouses die together in a car crash or something. Then life-insurance is essential to take care of your remaining children.

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