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The Basics of Life Insurance

Purchasing life insurance is the best way to ensure your loved ones are adequately provided for in case of your death.

How? By guaranteeing your family's survival in your absence. Life insurance can help your spouse pay off your home mortgage, provide an education for your children, supply monthly income for a period of time, or even leave your family savings.

Let's face it, no one ever plans for their family to go unprotected. But that is exactly what happens every day due to lack of preparation. That's why it's so important to get educated so you can find the life insurance protection that fits your family's needs.

What's Available?

There are many different types of life insurance available, each designed to fit unique circumstances and individual needs.

Depending on whether your goal is to leave money so your family can pay your final expenses or simply to provide them with savings, one of the following types of life insurance should be just what you need:

  1. Term life insurance: the simplest form. You purchase coverage for a specific period and, if you die during that time, your beneficiary receives the policy's value. Term insurance includes no investment component.
  2. Whole life insurance: a policy purchased to cover you for your whole life, not just a set period of time. Premiums remain level while the policy is in effect, and the insurer invests a portion of your premiums, building the policy's value over time.
  3. Universal life insurance: used to accumulate investment. You pay a minimum premium plus an amount you would like invested. The insurer chooses the investment vehicle, usually only bonds and mortgages, and both your investment and its returns are placed into a cash-value account. This account may then be used to pay future premiums, or it may continue to build.
  4. Variable life insurance: similar to universal life insurance, but includes a broader selection of investment products, including stocks. Beneficiaries receive the policy's face value, OR that amount PLUS the value of your investment account.

How to Get the Best Rates

There are five ways to ensure you get the best rates, along with the best life insurance coverage:

  • Always tell the truth when applying for life insurance. Lack of disclosure can cause your policy to be revoked within the first two years.
  • Go over your policy and reapply for lower rates when there are changes in your health.
  • Schedule required medical tests for first thing in the morning. During this time, your blood pressure and cholesterol levels are lower and you're less stressed.
  • Shop around for your life insurance plan. This purchase represents a big decision and a large financial commitment, so comparison shopping just makes sense.


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