Life Insurance

Why Should You Carry Life Insurnace?

Life insurance is a policy that a person buys to insure his or her life. Most people with families have it as a protection for those left behind when they die. Before so many women joined the work force, if a husband passed away and wasn't insured, the wife and children could be in dire straits. Some policies also build equity and can be borrowed against in an emergency or to make a major purchase. Payment is based on the insured's age, health, and credit status. Insurance companies also look into history of smoking and drinking alcohol as well as genetic tendencies toward heart disease or other serious conditions.

Term Life

Term life insurance is one type available. These policies aren't that expensive and are generally taken out if the insured can't afford any other. There are definite drawbacks to term policies. If you live longer than the term of the policy, you've basically paid for nothing, as your survivors won't be able to collect anything. Also, you don't build equity with these policies, so you can never borrow against it in an emergency situation.

Whole Life

Whole life insurance is the most beneficial policy, even though it's more expensive to buy. Whatever premium is established at the time you purchase the policy is what you'll always pay for it. Obviously the younger and healthier you are at the time you take out the policy the better. You build equity as you pay into the policy, so you have that as a back-up should you need money at some point. Insurance companies invest your premiums which is how they are able to be profitable as well as pay claims.

Investment Based Policies

There are two other policies on the market that are a bit different. Heavy investors are more likely to buy these policies. One is called universal and it allows you to earn interest and take money out against its value. Variable life insurance has a base value and you are allowed to increase its value according to your choice in investments.

Agents

Most people make their choices with the help of an insurance agent. It can be difficult to know the right plan for your needs without some advice. For information, check insurance websites and the telephone directory. It's also a good idea to get recommendations from family and friends.