Consider Different Life Insurance Types

For those individuals looking to acquire the right life insurance policy to protect their loved ones, it is important to be sold the correct way and not get taken for a ride.

As it stands, consumers can purchase life insurance either as an "individual' or as part of a "group' plan.

When purchasing an individual policy, consumers select the company, the plan, and the benefits and features that best suit their needs.

Purchasing a life insurance policy through an agent or broker means you will pay a commission which is loaded into the premium rate. The commission will compensate the seller for the time they advise you on the policy, for facilitating the application process, and for any added service necessary down the road to maintain the policy.

In some instances, you can purchase affordable life insurance from a savings bank, and in some cases you can purchase the policy straight from an insurer or from a fee-only financial advisor. If doing the latter, these are known as a 'no load' or "low load' policy. While there is no sales commission on these policies, the company will still have changes structured into the premium to cover different expenses.

Individuals also have the option of getting life insurance automatically from an employer. An employer may offer you the opportunity to purchase added life insurance under a group life insurance policy. Finally, there may also be the option of acquiring life insurance through a group life insurance policy from a union or trade association or other group you're a member of.

When it comes right down to it, there are a number of advantages to acquiring life insurance under a group policy:

First, group purchases at times can provide a cheaper rate for a given death benefit due to either the employer or other group sponsor subsidizing the premium or because the rates are averages, weighted by individuals younger than you.

There are generally no health qualifications for obtaining the group coverage, and premium payments are generally done by payroll deduction (for employer-based group coverage) or tied to other payments, lowering the chances of a missed payment.

The majority of employer group life insurance plans are term insurance, however if you depart that employer your state may require that you be permitted to convert the policy to a form of whole life insurance with the same insurer that offers the group life insurance. In that case, you then would pay premiums right to the insurer and keep the insurance in force.

Finally, credit cards and lending institutions may make available life insurance to pay off your outstanding loans in the event you die.

This procedure is generally made available in two ways:

First, as part of the loan at no extra charge, the expense of the life insurance is taken on by the lender and is included in its interest rate. For those individuals who have this type of credit life insurance, they do not need separate life insurance to pay off that loan if they die.

An option as an added cost, whereby you generally reject the optional coverage provided that you have some other life insurance (group or individual) that can be slated to pay off the loan in the event of your passing.

For those under the age of 50 and don't have other insurance that could pay off this loan, look at possibly purchasing individual life insurance for this purpose as the rates will typically be better.

For those at 50 or over (or younger dealing with health issues), if you have no other life insurance for this purpose, the optional credit life coverage is likely to be less expensive than individual life insurance.