Nobody knows what life has in store for them from one day to the next. It’s not something that we like to dwell on, but the fact of the matter is that a sudden and fatal accident or illness could result in our family being left to fend for themselves.

This could lead to all sorts of problems for your loved ones, most notably financial difficulty. Left to try and deal with monthly commitments and family debts, your family may be unable to cope financially without your income, and could end up losing everything they own.

Life Insurance Coverage
There is a way that you can provide peace of mind for yourself and security for your family, and that’s by taking out life insurance coverage. Life is full of unexpected twists and turns, some good and some bad. Life insurance coverage offers financial protection for your family in the worst-case scenario. You have a number of options when it comes to taking out life insurance coverage, and it is important to assess your needs before you commit to a policy.

Policy Coverage Types
Many couples today opt for a joint policy, as this covers the family if either of them passes away. However, you can also go for an individual policy based upon your needs and preference.

The two main types of insurance coverage are ‘term’ and ‘whole life’. Term coverage is the cheaper option, and is a very popular type of life insurance. You can get term coverage at affordable prices, and this type of policy covers you for a specified term, such as ten or fifteen years. Upon expiry of this term, your cover is declared null and void, and there is no financial gain or cash back.

Whole Life Insurance
A whole life policy is slightly different in that it covers you for life. Providing premiums have been kept up to date on the policy, your family will receive a payout whenever you die (subject to terms) and therefore many people see this as more of an investment type life insurance policy. Because of the benefits, this is a more expensive form of coverage with higher premiums, but can also provide additional peace of mind and security.

Payout Benefit
The payout from any form of life insurance coverage will prove invaluable to your family for a number of reasons. If you are an income earner and you pass away, your family will still be left to handle financial commitments and debts, other than those that may have been covered separately. The life insurance payout will enable your loved ones to pay for funeral costs and to settle as much debt as possible. In short, this type of coverage will ensure that your family has a more financially stable future in the event that you are no longer around to provide an income or contribute to the household finances.

Most insurers offer a range of plans to suit all sorts of needs and budgets, and because you can pay premiums on a monthly basis, you will not have to take a huge hit to your finances in order to benefit from this type of coverage.

Types of Life Insurance Available

A life insurance policy means many things to many people. To some, having a life insurance policy means that they’re thinking about adequately providing for their loved ones should anything unexpected happen to them. To others, having a life insurance policy means that their home mortgage will be paid off should they unexpectedly die. And, in a nutshell, that’s the thing about life insurance – it really is a general term that covers a multitude of circumstances.

Looking at the different types of life insurance available more closely then, the following are some types of life insurance to choose from to suit your personal needs:

Whole Life Insurance Policy
Sometimes also known as “universal” life insurance, whole life insurance is probably the most common of the life insurances policies that you’ll come across. The policy is fairly simple – it works on the basis of a basic permanent insurance plan into which you pay periodic payments, most commonly monthly, and provides protection to your beneficiaries over the course of your life. The downside of whole life insurance policies is that the lump-sum payment paid out on your death is calculated at the outset of the policy, and premiums are then calculated on this.

As you may be able to see, it fails to factor in the increased wealth factor of the insured and their loved ones as they get older and earn more money. Nor does it include the additional expenditure they’ll be making as they buy bigger and bigger (and more costly) housing and cars. This is certainly one factor you need to consider at the time of taking out the life insurance policy, or else you’ll be forever “topping up” the policy with additional policies. The upside of whole life insurance policies is that your premiums are fixed over the term of the policy, and so it does make it much simpler to budget for this.

Term Life Insurance Policy
The significant difference between term life and whole life insurance policies is that term life insurance policies factor in continued risk assessments. In other words, as the risks in your life change, so does your policy. To account for this, the premiums on term life insurance policies are also variable – so that if you are considered a high risk, you pay a higher premium than if you are considered a low risk.

Cost factors – which is cheaper and more affordable?
When considering which of the two principal life insurance policies available is the cheaper, you need to consider the following:

– age: obviously, as you get older, you’re mortality starts to show itself more than when you are younger. So, the age you are at the time you take out the policy will factor in the cost of your premiums;

– health: like age, health is an important factor in the risk assessment of anybody looking to take out a life insurance policy. Included in the health aspects of the risk assessment will be whether or not you smoke, are overweight, do regular exercise, etc;

– family history: with doctors telling us that more and more fatal diseases are generic in nature, your family health history will also be factored into your policy calculations;

– driving record: may sound strange, but a background check is usually undertaken to see if you have a poor driving record. If you do, expect to pay a higher premium.

Finally both whole life and term life insurance policies require you to undertake a physical check-up – and it probably this, as much as anything else, which will determine the risk assessment.