Life Insurance For Newbies

As you consider the wide range of life insurance coverage available, you may wonder what type really fits your needs now, and what will suit your needs in the future. A good, first step is to ask yourself why you are buying insurance, and how it will fill your personal and family financial security requirements. Do you want insurance to cover a new home or mortgage? A college education? A business investment? Your retirement? Your final expenses? Once you have the answers, you can look at the basic types of coverage, whole life, universal life, and term.

Whole Life Insurance — Cash Value for Your Dollar

Whole life insurance helps provide not only security from financial hardship in the case of a death, but also a “living” savings and investment vehicle for the policyholder. As cash value insurance that links insurance protection with savings, premium dollars paid contribute to the combined program. Premium payments first pay the cost of pure insurance coverage, including expenses and mortality factors of the insurance company; the company then invests “leftover” dollars to build the policy’s guaranteed cash value.

In addition to the guaranteed cash value buildup in the policy, policyholders are provided with regular dividend payments, the result of lower expenses, lower mortality rates, and higher investment results than were predicted when premiums were set.

Another whole life insurance feature is predictability of expense: Premium payments at inception…