There are very few things in life these days that cost less now than they did a decade ago. Fortunately, life insurance just happens to be one of them.
To be precise, a term life insurance policy costs about one-third less now than it did just ten years ago. This is good news if you’re currently shopping for life insurance. But don’t feel left out if you’re amongst the many that already have policies. By doing some comparison shopping and investing a small amount of time, you can easily swap out your current life insurance for a less expensive policy, possibly increasing your coverage in the process. Just remember: Never cancel a current life insurance policy until you are certain the new one is active and has gone into effect.
If you purchased a 20-year term life insurance policy ten years ago at the age of 30, you would likely see a substantial enough savings in today’s rates to swap that old 20-year policy out for a new 10-year term policy. There is also the option of adding an additional 10 years to your current insurance policy term rather than changing policies. This essentially means the 10-year term has been replaced with a 20-year for little more than what you were originally paying for just the 10-year.
The low cost of term life insurance tends to outcast permanent (whole) life insurance. Often permanent insurance is referred to as a “cash value insurance” given they carry an investment aspect to the policy. Still many feel that despite this financial benefit, permanent insurance in generally a waste of money.
The purpose behind purchasing life insurance isn’t to build a nest egg for yourself, but rather to ensure the protection of your family and loved ones should you unexpectedly pass away. If a return on your money is what you’re looking for, odds are you’re likely going to be better off purchasing a term policy for protection and investing the remainder of your money elsewhere that you would otherwise be spending on permanent insurance.
If you’re amongst the few who simply must see some sort of return from your life insurance, there are term policies available that can offer you what’s called “a return of premium”. They aren’t typically recommended for most, but they are certainly a better alternative to permanent insurance. The principle is pretty self-explanatory: when you’re term life insurance expires, you receive your premiums back.
Again, the obvious is clear that making your money grow can be accomplished in much more productive ways by sticking with term policy and investing any additional funds you may have separately. Deciding which direction to take is a matter of personal choice and that choice should be based upon the life insurance needs of you and your family in the future. At the end of the day, however, you’ll find that term insurance is still the most essential way to stretch your dollar, yielding larger amounts of protection with less impact on the wallet.
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- Common Mistakes when Choosing Life Insurance
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