Choosing the Right Life Insurance For You

You've finally decided to buy life insurance. You know that you want a little extra money available to help take care of your burial expenses, help your family adjust to the loss of your income, or take care of your children's education expenses. You may also have other considerations, such as leaving money for your heirs, maintaining a business, or giving to charity. However, even if you know what you want to do with the money, it can still be hard to know what to buy, or how much you should pay.

Start by thinking about how much money you'll need. Consider how much outstanding debt you have, how much your family will need to adjust after you're gone, what your funeral will cost, and the cost of any other things you'd like to do. If you find that you can't afford the policy that you'd like, prioritize what you want. You definitely need enough money to pay off your debts and funeral expenses, but what's most important to you after that? Is it replacing your income? Sending your children to college? The answers will vary from person to person, and it's important to think about it carefully. Try to balance everything as best you can, but be determined to at least have some insurance, no matter how little. Although I can be daunting to figure out what you need, it will be worse for your family if you have no life insurance at all!

When making a decision about how much insurance you need, start by figuring out how much life insurance you would want to get if cost were not a factor. Think about such factors as funeral costs, what your spouse and children need, and outstanding debts. After coming up with an amount based on those considerations, review price quotes, then balance the amount according to your budget realities. Life insurance is usually one of the first things to get cut in times of personal economic hardship. It is so important to choose a life insurance policy you can really afford, because you need it to be there for your family in case something happens to you.

If you get whole life insurance, though, you'll have insurance that works the opposite way. This policy will remain in effect for your entire lifespan so long as you make your payments properly. Since this insurance is more reliable for the customer than term insurance, it costs a bit more.

Universal is also an option that will never expire. However, it is also much more complex than whole life, with different accounts inside the overall universal life policy and different cash values in each of these accounts. Because of the different accounts and because the IRS is very favorable toward life insurance, many people find that universal life insurance is a good way to combine life insurance and savings: once the policy has built up enough cash value, you're able to withdraw from it. However, universal life insurance is very complex and would take another entire article to explain adequately.

I recommend that families who have a lot of expenses balance their life insurance by purchasing larger amounts of term life insurance, and a smaller amount of whole life insurance that they can pay up. By doing so, they will still have some whole life insurance after the term life insurance expires.

Universal life insurance is like whole life insurance in that it does not expire as long as the policyholder keeps the policy. It differs from regular whole life insurance in that it places the life insurance and the cash value in separate accounts, whereas regular whole life insurance keeps them together. Largely due to tax considerations, this type of life insurance is attractive to many people as a way to unite life insurance and savings. You can withdraw or borrow against the policy once it accrues enough cash value. You may even see an increase in the face value of the policy. This explanation of universal life insurance is very barebones, since a full explanation of it would require another article.

Susan Reynolds is the webmaster for a leading South African Life Insurance website. For more information visit: http://life.insurance123.co.za/