Policy Price

Article by Mark Manderson

Humans are as loath to ponder life insurance as to ponder their own mortal frailty; and young, unmarried humans are notorious for scarcely ever contemplating anything, so it’s no wonder that life insurance for singles doesn’t attract much attention. However, an early age is an advantageous time to commence a life insurance financial plan.

Singles’ financial obligations

Singles may not have any dependants for whom to care, but in this day of rampant debt, many yet have financial obligations-commonly credit card debt or outstanding student loans. Life insurance can be purchased to satisfy these obligations in the event that the debtor does not live to amortize them in the old-fashioned way.

Credit life insurance (not the same as credit protection insurance) is a convenient way to handle such an affair: The life insurance policy covers a particular debt, with the creditor as the policy’s beneficiary. As the policy owner works off the debt, the credit life insurance policy automatically decreases its death benefit and premium to suit.

Credit life insurance carries an administration cost, however, which oftentimes makes it more expensive than a simple non-auto-adjusting term life insurance policy. Using ordinary term life insurance, the creditor should still be the beneficiary, but the premium and death benefit do not change, even as the debt goes down.

Another reason for a life insurance death benefit is the possibility (or certainty) of final expenses, which may include funeral costs and final medical expenses. K to K is an ordinary death benefit for final expenses.

Admittedly, the financial needs discussed so far might be considered nothing more than illusory in some minds; when a young, single individual expires, he usually has no estate to speak of, so he is free of his obligations, and his creditors go unpaid. It is not an honourable way to handle one’s finances, but one must recognize that it is how many blackguards operate.

Using life insurance as an investment tool

The two types of life insurance policy mentioned thus far terminate after a certain duration, a period stipulated in the life insurance contract. However, a number of life insurance types fall under the category “permanent life insurance,” that is, insurance which continues so long as the insured lives and the necessary payments are made. Permanent life insurance comprehends an account called “cash value,” which accumulates interest tax-free.

Cash value, therefore, can be a functional investment vehicle. Beginning this investment early in life (i.e. even when single) is beneficial for two reasons: First is that starting early allows a longer timeline for your investment to grow. Second is that starting young is the surest way to lock in your policy under an affordable rate class and therefore have the cheapest life insurance rates possible.

What determines the rate of interest which cash value experiences? It depends on the variety of permanent insurance. The rate may be constant and guaranteed (traditional whole life); it may be declared periodically by the insurer (current assumption); it may be tied to a particular market index (indexed universal); or it may be invested where the policyholder chooses (variable universal).

Of the two chief divisions of permanent life insurance, universal life insurance is the better choice for making an investment because, rather than paying a fixed premium, the policyholder is free to pay the amount he chooses (subject to certain federal restrictions). Not only that, the cost of universal life insurance is lower than that of whole life insurance.

Singles out there, think about starting a life insurance policy now. Use an online life insurance quote engine to see what kind of rates you can expect (here’s one at www.wholesaleinsurance.net).

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