Saving Money with Affordable Life Insurance
The term affordable life insurance is anything but a contradiction. In fact, depending on how you view your life insurance needs and goals, low cost life insurance is readily available in any number of forms for those seeking to protect the ones they love. That said, consumer advocates and insurance providers alike stress that bargain hunting for life insurance is the wrong way to go about it. Whether you live in the now and opt for affordable premiums in the short term, or prefer to look ahead to long term low cost life insurance in the form of a whole life insurance plan, the key is finding a policy that provides you with the best value for your specific needs, not the lowest price.
How Much Life Insurance is Affordable Life Insurance?
The cost of any life insurance policy, term or whole, ultimately hinges on the amount of coverage you choose to invest in. The question is, how much is enough? Acknowledging that everybody's needs are different, there are a few simple equations out there to help you find the appropriate number. For term life insurance policies, most experts recommend that you multiply your annual income by 10 to 15 years in order to discover your ideal coverage amount. As for whole insurance policies, most experts recommend that you invest in a policy where the annual dividends on the general principle (take 7% as a conservative estimate), equate to 70% of your present annual income for as long as your beneficiaries are alive. If you make $100,000 a year, for example, a term life insurance policy in the neighborhood of $1,000,000 would fit the bill nicely.
Low Cost Life Insurance is all Relative
If you haven't already figured it out, the term "affordable life insurance" is a relative one, and nothing demonstrates that more than the two primary life insurance options available to consumers: term and whole life insurance. Here is a quick breakdown of each, and what you stand to save, and gain, by choosing one or the other.
- Term Life Insurance --Term life insurance is just what it sounds like: a policy purchased for a specific, pre-determined period of time. If you die during that period and have kept up on your payments, your beneficiaries will receive the full amount of your policy. If you're young and relatively healthy, term life insurance is hands down the most affordable life insurance choice. According to statistics compiled by business and finance expert Daniel Workman, an average 20-30 year old American man can expect to pay about $134 per year per $100,000 in coverage for a 10 year term. The catch: rates rise as you age, and as your health declines. For the exact same coverage a 40 year old will pay $170 per year, a 50 year old will pay around $310, and a 55 year old will pay as much as $455.
- Whole Life Insurance --With whole life insurance, on the other hand, you pay into the policy at a set rate as long as you own the policy (presumably for life). Whole life premiums are usually higher at the outset than a term policy, but since they don't fluctuate over time or expire, you'll end up saving more as you get older. The other advantage of a whole life insurance policy is that a whole life policy also acts like an investment account - a portion of your premiums are invested by your provider, and you receive a share of that profit back (known as cash value). That being the case, you can take out loans against your cash value to pay for anything from college tuition for the kids to that new home remodel you've been wanting (the balance is subtracted from your pay out should you pass away before the loan has been paid off).
Finding Affordable Life Insurance for You
The question to ask yourself isn't so much which life insurance is low cost life insurance, but which type provides you with the best coverage for the best value in meeting your life insurance needs. That is exactly where online quote services like NetQuote.com can be so valuable. By obtaining a handful of quotes from different providers through an online insurance quote service, you'll be able to comparison shop for the best coverage, the best rates, and the best service on the way to protecting you and yours.