Cheap Life Insurance: Too Good to Be True?

A life insurance contract is one of the most important contracts you will ever sign in your lifetime. Many people don't realise this, but you only have to ask a widow or widower with two or three children who has lost a breadwinning spouse in the prime of his or her life. You will most likely find this type of family unit living on welfare in a rented government home in an inner city ghetto. In contrast you can compare this family's lifestyle with one living as they always have, in the same home in a prestige location with sufficient financial support to see them through life while the children grow. Their financial plans remain unchanged and they are carrying no debt. The latter family had adequate life insurance cover on the spouse who unfortunately died. The former had none. Nothing you do will replace a lost spouse with responsibilities physically but there is much you can do to ensure your family doesn't suffer financially.

 

Term Life Insurance is the Cheapest

While accepting the need for adequate life insurance you may also be tempted to look around for the cheapest cover possible. You can look at this cost in two ways; first you can buy large amounts of cover for very little cost while young if you purchase term life insurance but secondly the cover is cheap because the life insurance underwriters have accepted your risk as being low. They are in effect betting that you will survive the term you have taken the cover out for. If they are right, and we all hope they are, you will forfeit the premiums you have paid. If they got it wrong and you died within the term you were insured for your beneficiaries would receive the full insured amount. It works much in the same way as does general insurance. For example you usually take out insurance on your home and contents on an annual basis. If your house didn't burn down during that time well and good but any insurance premiums you had paid for the cover will be forfeited to the insurance company. On the other hand if it had, the insurance company would have paid to have it rebuilt.

 

Life Insurance is Cheapest While you are Still Young

Term life insurance cover is different to general insurance in that the premiums you pay are heavily weighted towards the insured person's age. This is because insurance underwriters have determined that the younger you are the longer you are expected to live. As you get older and you feel you need to extend your cover after it has expired, you will have to take out new insurance for a fresh term at a higher cost. When you get into your sixties and seventies the cost of term insurance cover can be quite prohibitive. Therefore, it is possible to get cheap life insurance, without any catches.

 

Large Amounts of Cover When you Need it Most

Term life insurance is the type of insurance you take out to get you over the high financial responsibility periods of your life such as when you marry, buy a home, start raising children and start your own business. On each of these occasions you will need additional life insurance cover in case something was to happen to you while you were engaged in carrying out these life events. If you were to pass away for any reason whatsoever during these times, innocent people could suffer unnecessarily for many, many years, if you had neglected to financially protect them with adequate life insurance on your life. Cheap term life insurance is the ideal cover you need at these times in your life and it is term life insurance that can give it to you.

 

Importance of Competition in Life Insurance

Life insurance is different to most other commercial products that you buy in that it is a product you will wish you will never have to use despite paying for it each month. It is purely and simply a risk avoidance protection product that you can ill-afford to not have if things were to go seruously wrong. There are many companies online offering term life insurance and most of these are quite legitimate and sound business organisations but there are some that are doubtful and it is for this reason that you have to be careful to not choose such protection on the basis of price alone. Term life insurance is cheap when you consider what it offers but while nobody expects to die prematurely many of us unfortunately do. Sound life insurance companies have underwriters who have made a science out of the amount of risk the company carries with each individual person they have insured. Individuals policy holders are then grouped according to age, health, work and recreational habits. Good underwriters are able to tell the insurance company how many of those policy holders they expect will die within the term of insurance. They will not know precisely who they are, but they know a certain number will and the cost of paying out the sum insured for each one is therefore taken into account as far as costing is concerned. Then there are administrative cost to pay along with the need to build reserves and of course be profitable. If a life insurance company comes out offering too cheap a premium for a certain term of cover it should be examined thoroughly as it could be too good to be true but you will never know if it is or not. It will be your loved ones who will suffer as a result.

 

Make Sure you Research Who Your Life Insurance Company is

Over the last few years many life insurance companies have merged with one another, others have been swallowed up by larger organisation and many fly-by-nighters have entered the industry. Before you accept what you are being told make sure you do your research by finding out exactly who the company is who you wish to do business with. Read what kind of reviews they have been getting but at the same time remember that anybody can write a review and place it on the internet. It is usually safest if you stick to the well known establishments who have stood the test of time, even if you may have to pay a little more.