Texas Life Insurance Rates
While we all recognize that life insurance is a must, because of the coverage that it provides and because of the benefit that it can provide our families with when the time comes, it seems to have become harder to make a decision. There are so many choices about the type of policy to purchase and the protection to get, and this is made more difficult because there are so many insurers available on the market.
Some basic pointers about life insurance
Basically, there are two types of polices. The first are term policies that are created for a specific term, for example, twenty-years. During that twenty-year period, you will pay premiums to the insurers and should anything happen during that time; your family will receive the benefit of that coverage. However, if all is well, at the end of the twenty-years, you will be able to withdraw a specified amount from the insurance company. A lot of people invest in term policies as a form of forced savings with the target of being able to withdraw a lump sum amount in the future, perhaps after their retire. This is a sort of nest egg that can be prepared.
The second type of policy is whole life insurance coverage and this does exactly what is suggested. It protects for the duration of your life and at the end of it your family will receive the financial benefits in the form of a cash payment.
Should you choose a life insurance policy with an investment component?
It is possible to purchase a life insurance policy with an investment component. The basic life insurance policies do not come with this feature, and consequently the premiums tend to be more affordable as the insurance company will only need to contemplate payout at the end of its customer’s life. As the insured in such cases, unless there are other riders (individual benefits attached to the policy) that protect other aspects, such as critical illness and hospitalization, such a policy is direct and to the point and focused on benefits to your family, rather than to you as an individual.
By comparison, if you opt to take a life insurance policy that has an investment component, basically this means that you will be able to derive benefit during your lifetime. For example, it may be possible to opt out of the policy after ten-years, twenty-years, etc, and you can actually specify this at the outset. These policies will require you to make higher premium payments, as inevitably, the insurance company will have to prepare for your exit and that you will take your investment with you.
There are those who are of the view that investing in such policies is not worthwhile, and that there are better investment options out that, rather than to couple your insurance protection with your investment opportunities. Whilst this may be true, the question that you need to ask yourself is whether you are the sort to actually go out and look for investments. If not, then making such investments via your life insurance policy may actually be better than you would have done without!
Things to keep in mind when choosing whole life policies
There are many factors that will influence premium rates for whole life policies, including your age, whether you are a smoker, your family medical history and even the lifestyle you live. For example, if you are a skydiver, your premiums are going to go through the roof (pun intended)!
When making a decision about how much you should insure yourself for on a whole life policy, consider the dollar value. If you expect to live another 40 years, upon your death what will the dollar value be? You should target to insure yourself for an estimated 4 times the value of what the money is worth now. Therefore, if you intend to insure your life so your family will receive a minimum of $400,000 when you die, ask your agent to work that out for you and then see what the premiums are like. Whilst it may be a little more burdensome financially, you can be confident that the amount your family receives will be more substantial.
At the end of the day, it is useful to recognize that whether your objective is to invest in your future or to protect your family when you are no longer around, investing in life insurance is a sensible thing to do and where possible, start young and increase your coverage over time to ensure against any eventuality.