Life Insurance and What’s Best For You

dirty money

 

So when it comes to matters of death a lot of people shy away from it. Some people don’t like to talk about it. Perhaps they like the notion of the idea of living forever. Yet the idea sounds good but in reality people die everyday. I am writing this because over the years I would read articles about people not having enough money to bury their dead or even see people within the community here in Baltimore asking for money to help bury their loved ones. I am all about helping one another but sometimes burying people is a heavy burden when people to not have the financial means to do so. Now I often would see some of the same people and would wonder where they scamming but never mind that, I would think they should have purchased life insurance. Life insurance is very important because it lifts the burden of having family members coming up with funds to bury their love one and not becoming financially responsible for debt if there is any. The first thing most people will say is, “I can’t afford life insurance.” In some cases some people cannot afford a premium. Perhaps they don’t make enough money on their job or perhaps they do not prioritize. One has to weigh the pros and cons of having life insurance vs. not having it. Now if you are well off financially than you may not need life insurance.

 

cash value

 

There are two types of life insurance: Term and Whole. Term insurance is insurance that is set for a time period and it does not have an investment component with it. The insurance is brought for a set period of time as long as the premium is paid. Annual-renewable term is purchased yearly.

I noticed a there is a big difference in the amount of premium that is paid compared to whole life insurance when it comes to term insurance. You receive more insurance. In the event that a child is left behind one is able to calculate in that insurance a monthly allowance for this child and other expenses. A rider is allowed on the policy.

Whole life insurance is a type of insurance that is permanent and includes and investment fund. This type of insurance you are paying for a fixed amount that is to be paid on your death. Part of the premium goes towards building cash value from investments made by the insurance company. Cash value builds tax-deferred each year that you keep the policy and you can borrow against the cash accumulation without being taxed. This is not done with term insurance and the premium increases the older you get.

Universal life is a type of permanent type of insurance and it combines term insurance with a money-market type investment. Variable and Variable Universal life insurance is a policy that is permanent with an investment fund tied to stock or bond-mutual fund investment.

 

It is always good to look into insurance to see if you can afford a monthly premium. Even though we do not like to think of death for ourselves or our love ones, it is apart of life and it’s better to be proactive instead to reactive.

 

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