The Purchase Of Affordable Life Insurance

There is an old saying in the life insurance business, that the best kind of life insurance to buy is that which you can afford. This does make a lot of sense because if a person cannot afford something, then they won’t be able to keep it. There is another old saying that says that the only kind of life insurance that is any good, is the kind that is in force when you die.

As tongue in cheek as these statements sound, they do have a lot of the ring of the truth in them. So when someone talks about affordable life insurance, you really need to get to the bottom of what that really means.

Life insurance is really purchased to provide a death benefit in case someone dies. In an ideal situation there should be enough money from life insurance to provide for a family in case of the death of a breadwinner, or breadwinners in the case of two working parents.

There are two kinds of life insurance, which are term and permanent life insurance. Term life insurance provides for coverage only for a limited period of time, such as 20 or 30 years for example. It is cheaper, because it is going to expire on a certain date. This still could work out to a good strategy because in most cases, by the time the policy quits, most of the kids are grown and out on their own.

A permanent policy will usually last until age 100, which is the actuarial equivalent of a lifetime, and it has a cash surrender value, which can be borrowed by the policyholder in an emergency. The cash value is really a reserve that keeps the premium level against the increasing mortality charge, as a person gets older year by year.

Depending on circumstances and desired goals, both serve their purposes, and can be used in combination to solve many problems of coverage.

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