Tuesday, June 26, 2007

Phoenix Life Insurance

When was the last time you purchased life insurance?

Did your insurance agent explain and show you ALL your options?

Here are some easy definitions:

Term Insurance - Low cost price while you are young. High cost price when you are old. You won't see alot of senior citizens with term insurance because the premium either sky rockets at a certain age or they simply expire. You do not earn cash with these policies; however, some term policies will refund your premiums after a set number of years.

Whole Life - Level premium for the duration of the policy. Generally considered the Cadillac of life insurance, WL can be costly when compared to other policies. It does build cash inside the policy, which can be used to reduce your premium, buy additional insurance or other options. At some point, you may be able to completely stop paying premiums on a whole life policy.

Universal Life - This is where life insurance gets confusing. UL has a level premium but the premium can be flexible, which can cause the life of the policy to change if you pay less than the target premium. There are guaranteed death benefit UL's, which are probably the best type, if you buy a UL.

Variable Universal Life - A level premium policy that invests a portion of your premium into various mutual funds. This policy has the potential to show great gains, as long as the mutual funds do well. If the mutual funds do not do well over a longer period, your policy can be affected (you may have to pay more premiums, it could lapse, etc).

Some people pooh pooh Term insurance. Some bad mouth permanent life insurance. They both serve a purpose. Just ask alot of questions when you are considering buying life insurance, such as: how long will you need it, how much do you need, what is the purpose of it (pay off house, ensure money is available for kids college, support a surviving spouse, etc).

Balance those questions and answers to arrive at your decision.

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1 comment:

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