Why buy life insurance?
Buying a life insurance policy comes with many benefits. Many of us are responsible for taking care of other people. We get up early in the morning and go to work so that our families can continue to eat, play, sleep under a roof, and go to school. Some of us own our own businesses and are responsible for the health and happiness of our employees. In both of these cases life insurance can be a powerful tool in helping us with our life goals. Many financial experts say that a life insurance policy is a sound financial investment, helping you with complicated matters such as property tax, for example. Life insurance is a way of showing your employees and your family that you love them. It’s a way of showing them that their lives could go on even in the event of your death.
What are the kinds of life insurance?
There are basically two kinds of life insurance, term life insurance and whole life insurance. Whole life insurance is for life, it’s permanent. Term life insurance is for a briefer period of time, usually one to thirty years; you choose the amount of time for which you want to be covered. Term life insurance is generally less expensive that whole life insurance, costing you hundreds rather than thousands of dollars per year. With whole life insurance, your life insurance company handles your investments for you; with term life insurance, you can use the money you save to invest in your own way.
How do I decide how much coverage I need?
In deciding how much money you need to be covered for, there is a simple calculation you can make based on your yearly income. You simply add what your yearly income would be in total by the time of your retirement. That way, your family would be able to continue to enjoy the lifestyle it enjoys currently even if you were to pass on. You also want to add in the expenses of a funeral.
What’s the cash surrender value of my life insurance policy?
Surrendering a life insurance policy is an option available to most life insurance policy holders. Surrendering a life insurance policy means selling back your policy to your life insurance company. You surrender your life insurance policy for its cash value. You can only surrender your life insurance policy if you have whole life insurance, because in that case your life insurance is permanent. With term life insurance, you don’t have the option of surrendering your policy – if you don’t want it any longer, you simply let it run out. You simply let it go for the full number of years you’ve contracted for, and then you’re done with it.
How does it work?
When you surrender your life insurance policy you receive back the premiums you have already paid and also the earnings, if any, of your investments. The cash surrender value of your life insurance policy has to do with the savings portion of that policy, rather than the premiums you have already paid. For this reason, the cash surrender value of your life insurance policy is generally relatively small during the early years of your ownership. Cash surrender value builds with the years that you own the life insurance policy.
Is surrendering my policy for it’s cash value a good option?
Many life insurance experts claim that there are better ways to get rid of your whole life insurance policy that surrendering it. They say that surrendering your life insurance policy isn’t the best financial decision you have available to you. Rather than simply surrendering your life insurance policy back to the company, they say, you can sell your life insurance policy to an interested investor. This process is known as life settlement. When it comes to surrendering a life insurance policy, you’ll really want to research all your options before making a decision. More and more life insurance companies are making the benefits of a life insurance settlement over a life insurance surrendering known to their clients.