• Michael Christensen

More Affordable Life Insurance Americans Live Longer

The time is just right to get the kind of financial security that a life insurance policy can offer.

Life insurance makes a certain specified amount of money available to chosen beneficiaries in the event of death of the insured party. As Americans are increasingly living longer, as per the Centers of Disease Control, the average life expectancy for men and women in 2000 went up to 74 and 79 years respectively, from 70 and 77 years in 1980, insurance companies have started reducing rates on life insurance. In some cases up to 35 percent giving policyholders the potential to save hundreds of dollars every year.

This makes now the perfect opportunity to purchase life insurance with lowered rates and convenience of comparing rates online. Life insurance makes it a lot easier for loved ones to tackle financial complications, during the mourning period and even years later. It is mainly primary caregivers and those with dependents who are most in need of life insurance to cover expenses following death, inclusive of funeral costs and outstanding debt. Not to mention, financial support to see loved ones through future expenses like house payments and college tuition.

How Much and What Type Should You Buy?

Basically your coverage should be equivalent to seven to 10 times your annual income, subject to your income level and stage in life. Your coverage should ideally be sufficient for your beneficiaries to invest the death benefit after paying final expenses and keep up their lifestyle with the interest alone.

Life insurance coverage comes in two basic types - term life insurance and permanent life insurance. For each type of life insurance, understanding the pros and cons can be crucial.

Coverage for a specified period of time like 30 years is known as term life insurance and only offers cash death benefit. In this life insurance, beneficiaries stand to get the death benefit only if the insured person dies in this time duration. Being a no-frills insurance, term life insurance makes a typically more affordable option for young families on a budget.

More expensive but with options for future is permanent life insurance. This life insurance coverage comes with a lifetime protection, combining a death benefit with a tax-deferred savings component called cash value. The cash value is paid on cancellation of the coverage and allows borrowing or withdrawal of a portion of the cash value while keeping the life insurance in effect. With availability of fixed premiums and tax benefits, permanent life insurance can be the more affordable option in the long run.

How Should You Choose?

Prior to deciding on purchase, compare insurance companies. Research each policy with different providers to accurately compare policy performance and other benefits. Ask the insurance companies under consideration if any additional services beyond the life insurance contract are being offered. Some companies may offer survivors free financial plans and special assistance to help in financial decision-making.

Also review financial strength ratings of insurance companies by independent organizations like Moody's Investor Services. It will help in making sure you choose a life insurance policy from an insurance company that's financially sound.

These measures will prepare you well for purchasing the right life insurance policy to meet your requirements as you grow older.

Critical illness insurance is designed to protect yourself or your family against certain critical illnesses. Unlike a life insurance cover, critical illness insurance covers you if you suffer from a critical illness by paying a tax-free lump sum. Critical illness insurance is often used to clear any outstanding financial liabilities or to fund private treatment or specialist equipment if needed. Research into critical illnesses shows that unfortunately many of us will develop a critical illness during our lifetime. Whilst a life insurance cover will pay upon death, a critical illness insurance policy can save you major financial stresses in case you are a victim of a major critical illness.

Recent research shows that a lot of men and women may suffer from a critical illness such as heart attack, stroke or cancer before reaching the age of 65. Although we never expect to develop a critical illness within our lifetime, statistics show that a number of us will need to be out of work at least once during our employed life. It does not just happen to others and a critical illness insurance may prove to be essential to see you through a difficult period of critical illness.

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