On the last post about life insurance I presented three questions you need to ask yourself before getting life insurance.
In this post I’m going to be answering each post so that you know enough to get your very own life insurance policy.
What does the insurance company get in return?
I’m sure you asked the question “how much does the insurance agent make on a life insurance policy?”
Of course the agents wouldn’t want you to know this, but the average Life insurance agent receives 95 percent of what you pay the first year in a policy. When you renew your policy they receive 5 to 10 percent in commission on the policy for the next year.
What types of policies are out there?
There are so many life insurance policies, but they all stem from the two major policies Whole life and Term life.
This policy is built to spread the cost of coverage throughout your life span and it is solely built off of your contribution so it is more expensive.
The benefit of “whole life” is that it does not expire and has set payments. Also as long as you make the proper payments on the policy the insurance company is bound by the contract agreement.
Another benefit of “whole life” is that the policy builds cash value, which means you can borrow against the policy.
CONS: This policy is expensive.
This policy is built to cover you over a specific period of time usually anywhere from 10 to 20 years.
The benefit of “term life” is that it tends to be six to ten times more affordable than a whole life policy.
Another benefit is that “term life” can be converted into a whole life policy giving you full life long coverage.
CONS: This policy does not hold a cash value and will expire.
Which policy is the best for you?
My personal opinion is that term life is better because of how you can convert the policy into a whole life plan, but there are cons for doing that. Such as, the policy gives less coverage and if you withdraw money from the policy you leave less for your family after you pass away.
The best policy would be whole life, if you can afford it the policy has no expiration date and holds a cash value. So you don’t run the risk of getting nothing from your insurance policy.
Thank you for reading
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