The Best Forms of Life Insurance Policy

When looking for life insurance it’s important to find the best policy for your own unique needs. There are so many web sites offering online discount life insurance so it’s a common mistake made by many to end up with a policy that’s not suitable.

There are a variety of life insurance policies available so it’s important to understand the differences.

Term Life Insurance:

Term life insurance is bit like leasing a car. You pay cover for a predefined term & are covered for that term. However at the end of the term whether for example its 15 years or 30 years the deal is done & you simply walk away.

This means that term life insurance only offers protection for the duration of the mortgage & is usually of little value once your mortgage is fully paid off.

However term insurance is cheap & the cost can even reduce over time. There are five main forms of term life insurance & these are as follows:

* The first is known as level term cover & it’s the most common type. With this form of policy the premium costs are locked in for as long as you hold the policy. In other words you will pay the same amount throughout the entire term of the policy.Unfortunately it means that as time goes by you could end up paying more for your life cover. However the nice thing is that you get the benefit of paying at today’s rates. However bear in mind that over time these rates could fall instead of rise.

* The next form of term life insurance is escalating term cover. This policy can be more expensive as you pay an increasing amount each year. However the lump sum payable at death also increases. These are normally low cost policies & are best suited to younger people.

* The third type of term cover is known as decreasing term insurance. With this type of policy the monthly/annual payments stay exactly the same. However the amount of protection reduces each year.

* The forth type of term life policy is known as increasing term insurance. With this type of term life insurance the benefit on death increases. However in order to make up for this increase you will need to increase your premiums at certain times for example on the birth of a child or as your financial circumstances improve.

* The fifth & final type of term life insurance is known as convertible term insurance. This type of term life policy provides a way for you to convert your policy into an investment/insurance policy in the future. With this type of policy the price of your future investment policy is based on your health when you bought the cheaper term insurance.

Whole of Life Insurance & it’s Advantages:

A whole of life policy can be more complicated & more expensive than term life insurance. However a whole of life insurance policy covers you up until the time of your death providing that you keep paying your premiums . The advantage of these types of policy is that your family could receive a considerable lump sum when you die.

The amount generally increases in value over the years. Also the contributions you make to your policy normally earn interest each year. When this happens your premiums may reduce over time to the point where you no longer have any more premiums to pay.

However it’s important to understand that it possible the cash-in-value of a whole of life policy may actually be less than the amount put into the policy over it’s full term.

Summary:

Buying a term life policy or whole of life insurance is an important decision & one that needs to be made carefully. Before you take the plunge you need to examine your needs & exactly what you wish to achieve.

Term life policies are the simplest & cheapest to set up & cover you only for as long as you need them.

On the other hand a whole of life policy might suit you better if you need a policy that grows in value over the years.

Both types have their advantages & disadvantages & careful consideration & advice from a competent insurance adviser is vitally important.

Michael Pettigrew writes articles for insurance website Best Insurance Quotes who provide quality cheap life insurance cover. Visit Best Insurance Quotes for great life insurance cover