Why Should You Need Liability Life Insurance?

RyanD
January 3, 2013

While most people do everything they can to stay healthy and be there for their family, no one is guaranteed to wake up the next morning. If someone does die unexpectedly, the event can cause a lot of problems within the family. This is especially true if the now deceased person was the primary income provider because the family will lose their source of income. Fortunately, there is a solution to this problem, and it is to purchase liability life insurance. Most people have likely heard of liability life insurance, but they likely do not know exactly how it works and what their different options include.

What is Liability Life Insurance?
When it comes to purchasing a liability life insurance policy, people will have two options, which are term life and whole life. Term-life insurance is normally purchased in 10-year increments. The rates will normally start fairly low with this type of plan assuming the person buys their first policy when they are younger. However, as the person continues to renew their plan as they become older, their rates will slowly begin to rise. In addition, if the person begins to develop some type of illness or shows signs of any other medical condition, the insurance companies may also raise the rates or even cancel a renewal application. Whole-life insurance, on the other hand, gives people an opportunity to lock in a guaranteed rate for their entire life. This plan is good for many people who acquire a policy when they are younger because the a decent-sized policy will likely cost less per month than they were paying for car insurance. However, the disadvantage with whole-life insurance is that the premium is typically invested in a type of mutual fund, but the policyholder will not reap all of the gains on the investment because a clause will direct a large portion to the policy. When it comes to deciding which policy is best, it will be an individual decision, but people who do not buy their plan until they are a little older will likely prefer a term-life plan.

Finding the Best Liability Life Insurance Policy
People should now have a better comprehension about what the different types of liability life-insurance plans are, but they might be wondering what the best one is for them. As aforementioned, whole-life insurance will be cheaper for people who purchase their policy at a younger age, and term-life insurance might be just as cheap for older people. The thing that people need to realize with both plans is that the insurance company is guaranteeing a certain amount at the time of death, but the amount of money being guaranteed is less than the insurance company earns on the investment. People could invest on their own as a homemade life-insurance policy; however, they would be running the risk that they could decease before their investments provided a temporary income for the family until the deceased member’s income could be replaced. For those who are ready to acquire a life insurance policy, they will be able to do so speaking with their insurance agent or banker. Some insurance companies also specialize in life insurance.

Life insurance can be a great investment for those who want to ensure their family will have some income if the primary income earner dies unexpectedly. However, it is important for people to consider which type of policy will work best for them. With whole life and term-life insurance plans, everyone will find a plan that is perfect.

Byline: Ryan D recommends visiting Insurance Swami to find the best life insurance policy available.