It is important to know the different types of life insurance before you make any specific choices. Some are cheep, some are more, some are long term, some you can use and some you can use and not even pay back!

There is so much insurance out there. I got a new phone the other day and guess what? “Would you like to insure your phone? Its called apple care” Insurance is everywhere. Being covered is great but getting too much or the wrong coverage can be a huge waste of cash. Its always best to set yourself up with personal coverage that fits YOU. Below is a break down of some of the general plans that you can use and see what fits you best.

Term Insurance

Term insurance covers you for an expected length of time or a specific… you guessed it, term. It is used to cover mortgages, debts or perhaps cover a length of time a spouse would need to look after children.

When a term is over the coverage ends. This is the least expensive type of life insurance available but be careful, because if you need to renew the premiums are increased drastically upon renewal due to your age. (the older you are, the more likely you are to… kick the bucket)

Term can however be converted to a whole life policy or extended if it is written into the initial policy.

Whole life

A whole life place covers you until you die. This is used to cover funeral expenses, fund children schooling, pay off debts or give money to a certain charity or foundation. It is a known amount that you want available for you kin (or whoever) upon death.

Whole life insurance is a contract with premiums that includes insurance and investment components. The insurance component pays a predetermined amount when the insured individual dies. The investment component builds an accumulated cash value the insured individual can borrow against or withdraw. This is a great thing to set up for children. It will defiantly be more than term, but it will be cheaper if they apply when they are 30 years old and by the time they’re 20 there should be a cash value you can borrow for their schooling, travel or investing in some real estate to start a portfolio of wealth. (wink wink) In some plans they can take this loan off the pay out upon death meaning you never have to pay it pack.

Premiums are higher but remain the same throughout the life time of the policy. If you are healthy at 15 that is the time they evaluate you. a smart thing to get before age stuff kicks in.

Universal Life

This coverage covers you until you die. This also has an insurance and an investment component and you can be more hands on for the investment portion. But there is really no growth in these policies unless you are maybe a business owner who is trying to save money on taxes and are able to put lump payments into the policy. The government recently made changes to universal life policies and how the policy is funded by the policy holder basically making it hard to see the real benefit in the investment portion for even those with a lot of money to put into them.

These have high premiums and need lots of money to be put in to grow any investment.

There are the basics. I always suggest talking to a professional about your coverage and your needs. All insurance professionals will sit down with you for free to looks at your coverage and help you get what you want or learn more about what you have.

Is there is an investment lump sitting there waiting to be used???

Brendan