Daisy's Notes

Friday, February 10, 2006

Life Insurance

The main types of life insurance on the market today fall into two categories: term and permanent.

The basic difference between term and whole life insurance is this: a term policy is life coverage only. On the death of the insured it pays the face amount of the policy to the named beneficiary. Whole life insurance, on the other hand, combines a term policy with an investment component. The investment could be in bonds and money-market instruments or stocks. The policy builds cash value that you can borrow against. The three most common types of whole life insurance are traditional whole life policies, universal and variable. Whole life insurance is expensive. It usually comes with high fees and commissions.

For most people, the right type of life insurance is term life insurance.

The financial soundness of the insurer is a critical concern. In general, go with an insurer rated A or better. There is a good web site called insure.com, where you can get ratings online from Standard & Poor's as well comprehensive reports on individual insurers.

0 Comments:

Post a Comment

<< Home


Google