26 May, 2008

Many people are concerned about protecting their loved ones financially in the event of their death. The most economical way to do so is through life insurance. I'm often asked the question, "What type of life insurance should I get?"

First, you need to know you purchase it with good health, and you pay for it with money. Your age, health and lifestyle are major factors in determining what you will pay for life insurance. The insurance company usually will require an extensive physical exam and sometimes will request the insured's medical records be sent to the company for review. Some companies take a look at the insured's family history as well.

Life insurance has two key components. The death benefit is the face amount of the policy that would be paid to the beneficiary upon the death of the insured. The other key component is the premium, the payment that must be made to keep the insurance in force.

There really only are two types of life insurance, term and permanent, but there are different forms of each. Today I'll discuss term insurance, the less expensive of the two.

Term is just like the meaning of the word - it is in place for a certain period of time. During this period, the premium should remain unchanged. After the term expires, the premium usually has a steep increase because of the insured's older age and the related higher risk to the insurer.

In the past five years or so, some life insurance companies have offered a new rider to life insurance contracts called the return of premium rider. This rider makes it possible for a person to purchase term insurance and at the end of the term, assuming the insured still is alive, receive all of his premium payments back. Therefore, the net cost to the insured is zero.

Source : http://www.southtownstar.com