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Choosing Life Insurance

It is hard to watch television these days and not hear about how important it is to have life insurance. According to the ads it is one of the only (if not THE only) ways to protect your family from complete disaster - particularly if you are the sole provider in the home.

Deciding to buy life insurance can be a scary step for some people. But it is nothing compared to the chaos of insurance terms and terminology that you have to wade through to find the right policy. It's no wonder so many people choose to live without life insurance instead of trying to figure it all out.

There are two basic types of life insurance policies: term life and whole life. The names give a good idea of how the policies work. Term life insurance is for a limited amount of a time (a given TERM). Whole life insurance is in place for the WHOLE LIFE of the insured party (as long as the premiums are paid on time).

Term life insurance is usually used to cover the expense of large purchases (like the cost of a new home). In case of a death, the policy will cover the cost of these expenses. Most often the insurance policy coincides with the terms of the loan (like 30 year term to cover a 30 year mortgage).

Some people look at a Whole Life policy as a savings plan. The cash value (or loan value) of the policy builds up over time and can usually be used by the policy owner. Part of the premium goes to build up the cash value.

It is possible to invest in multiple policies. A Whole Life policy can be used for the savings and security while a Term Life policy can be purchased for times when there is major changes in lifestyle (like the addition of children) or large purchases (like a home).

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Bill also writes for Low.com. This website offers low cost health, life, homeowners and auto insurance. Click the underlined link to learn more about consumer rights, credit cards and tips on saving money.

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