Life insurance lets you prepare for the future of your loved ones long after you’re gone. Death is unavoidable and also unpredictable. If you want to make sure that everything will be taken cared of for your family at the time of your demise, you may consider applying for a life insurance. A life insurance broker can help you understand better the benefits and risks involved on the policies. An insurance broker and an insurance agent are almost the same since they both help clients regarding their policies. However, an insurance agent works for the insurance company. An insurance broker does not have any ties with the insurance company. He works independently or works for an insurance brokerage firm and provides services to clients for finding the best policy and helping with the application, as well as claims.
There are two main types of life insurance. They are whole life insurance and term life insurance. Whole life insurance is a policy that brings lifetime coverage to the policyholder. With term life insurance, the policyholder is only covered for the years of coverage enrolled. The minimum coverage is usually 1 year. Some people prefer whole life while others go for term life. If you do not want to pay for your policy in your lifetime, term life may be a good option for you. However, this type of life insurance also has its pros and cons. Consider them carefully before deciding to apply for term life insurance. Your term life insurance broker can help you understand better your options.
Advantages of Term Life Insurance
- Less Expensive. The rate for term life insurance is generally cheaper than whole life insurance. If you think you cannot pay for the expensive monthly premiums of whole life insurance but you still want to secure the future of your family in time of your demise, term life insurance will give you this option. There are various term life policies available. You can choose one that suits your budget, as well as the period that you want to be covered.
- Invest Money on other Areas. Since you will be paying lower rate than that of a whole life insurance, you can use the money that you save for other investments. For instance, instead of paying $300 per month for a whole life insurance, you may find a term life insurance that pays for $150 a month. You can save the other $150 and start a business once you have enough savings.
- Tax Free Benefits. The death benefits or face amount that your beneficiaries will receive upon your death is tax-free. This means that they can have the full amount without being deducted for tax. With this, you can be sure that they can pay for the funeral expenses, as well as have enough money to pay for the children’s education and for living a comfortable life.
- Fixed Premium Rate. Most term life policies have fix premium rate. This means that you will pay the same amount for the entire duration of the policy. However, there are some term life policies that may increase their premium rate at some point. Term life insurance brokers would know about these differences. Make sure to check with your broker if your policy has a fix premium rate.
Disadvantages of Term Life Insurance
- Limited Coverage. The most obvious disadvantage of term life insurance is its limited coverage. With whole life insurance, since this is a lifetime coverage, the beneficiaries will receive the death benefits anytime the policyholder dies. However, with term life coverage, the policyholder is only covered within a specific period. For instance, if you applied for a 1 year term life insurance, you will be covered for a whole year from the time of your application. If you died within that year, your beneficiaries will receive the policy’s face amount. However, if you died after the term life policy expired, then your beneficiaries will not get anything.
- No Cash Value. Whole life insurance is more expensive than term life insurance. However, a certain amount is set as cash value, which accumulates overtime. This can be cashed out or borrowed once it reached a specific period in which you are allowed to withdraw without charges. This means that you can use the money that you pay for emergency or for your retirement on the right time. This is not available on term life policies. The money that you pay for this type of policy is for the death benefits alone. If the coverage expired and you did not die, you will not be able to get anything from the policy.
Choosing a Term Life Insurance Broker
Purchasing the best life insurance is an important decision to make. After all, this will determine the future of your loved ones in time of your death. An insurance broker will be a huge help in making that important decision. Take time to do your research and compare insurance brokers. A lot of them offer free initial consultations. Take advantage of this to get to know them, as this will help you decide on which broker to hire. Find those that represent reputable firms and are licensed to offer services on your state. He should be able to explain what you need to know in an easy to understand manner.