Compare Life Insurance

There are three main types of life insurance: term, whole, and universal.

Term life insurance is temporary. The policy comes with a fixed period of coverage (which will be abbreviated if the insured dies before the policy expires). Term policies last from 1 to 30 years (though 1-year term policies are typically marketed as ART (annual renewable term) life insurance).

Whole and universal life insurance are both "permanent" policies, but they differ from each other quite a lot. What they have in common is that they can be maintained until they pay a death benefit (unlike term life insurance, which may expire without paying a death benefit). Ironically, whole life insurance may not last a lifetime. It can pay a death benefit while the insured is still alive. Generally, whole life policies are designed to mature (pay their benefit) when the insured reaches age 100 (unless, of course, he/she dies before that; then it will just pay its death benefit upon the death of the insured). Universal life insurance really can be perpetuated indefinitely.

Universal life insurance is cheaper than whole life insurance because it makes less of a guarantee about its cash value growth and makes no guarantees about how much cash value it will hold at any given time. The structure of universal life insurance requires that the policy owner be mindful of its cash value in order to prevent it lapsing. To keep a whole life insurance policy from lapsing, all the policy owner has to do is follow the required payment schedule.

When we compare life insurance in terms of price, term life insurance is by far the cheapest. Then comes universal. Then comes whole.

When we compare life insurance for flexibility, universal outdistances the other two by far. Whole life insurance slightly beats out term life insurance. Universal life insurance's flexibility lets you adjust its face amount. You can also pay premiums in whatever amount, at whatever time you please. You can withdraw money from your policy's cash value and take out loans against it.

Whole life insurance's flexibility allows you to take out policy loans but not make withdrawals (the difference between the two is that policy loans must be repaid and withdrawals cannot be repaid). Also, whole life insurance comes with different premium plans, such as modified premium and graded premium.

Term life insurance accrues no cash value and is only purchased on a level premium.

When we compare life insurance in terms of longevity, universal life insurance wins. It can be perpetuated forever (though your rates do increase each year, as the insured grows older; potentially however, your interest on your cash value may cover these escalating costs). Whole life insurance comes in next, capping out when the insured reaches age 100 (these days, you may find policies that last until age 125). Term life insurance comes last, persisting for a maximum of 30 years (no, you won't be able to get a term life insurance policy that lasts beyond age 100 because nobody's crazy enough to sell a 30-year term policy on an individual who's already older than 70... well, maybe Lloyd's of London).

When you shop for life insurance, you should evaluate your insurance needs and resolve upon which of the types of life insurance best meets those. Then it's time to compare prices, that is compare life insurance quotes.

To compare life insurance quotes effectively, it's best to go through a life insurance agency (or brokerage or agent). The agency won't charge you any money. Instead, if it helps you buy an insurance product, the agent will be paid on commission from whichever insurer gets your business.

In truth, there is a way that an agent can increase the unseen cost of your policy, however. When buying cash value life insurance (such as whole or universal), if you surrender your policy during the first few years of its force, surrender charges may apply. Surrender charges are implemented so that the insurer can recover basic costs which your policy has imposed, the chief of these being the commission that it had to pay the agent. Therefore, the use of an agent can possibly increase what a policy costs you (but it shows a remarkable lack of foresight to be obliged to surrender one's policy during the first few years of its force).

I suppose there is actually a second way that an agent can increase the cost of your insurance, and that is if you let the agent talk you into purchasing a product that's just not right for you. An example is if your agent talks you into buying whole life coverage when that's really not what you need. Whole life insurance is a nice asset for some people, but it is expensive, and it really isn't what most people need. A million-dollar whole life insurance policy provides the same death benefit that a million-dollar term life insurance policy provides -- but at a way higher price. Moreover, most people really don't need coverage for their whole lives; they only need it while they're still gainfully employed.

I'm not saying you shouldn't take advice from your agent (indeed, that's one of the two principal benefits of using an agent, and it is certain that most insurance shoppers really stand in need of guidance). However, you should get a feel for whether your agent feels like a salesman or a real agent (in the historical sense of the word). Does he/she listen to your circumstances or only tell you your needs? Does he/she make suggestions or only imperatives? Does he/she work for a reputable firm?

It's okay to look around at more than one agency before deciding on an agent whom you can trust (ironically, this may not be the agent who makes you most comfortable but will be the agent who is most honest with you). If you need a starting point, travel over to www.wholesaleinsurance.net to read more life insurance information or to contact a life insurance agent.

For another lens on life insurance, see Term Life Ins