Term Life Insurance
Term life insurance provides income for your beneficiaries only if you die during the insured period. In the early years, term insurance costs much less than permanent insurance. Term insurance has no savings feature. Because of this, some experts suggest that you buy term insurance and save the difference between the cost of term and permanent insurance. They suggest you put the money saved in an investment which earns a higher rate of interest than that guaranteed on the savings portion of permanent insurance. According to these experts, if you do this, term insurance will be the best buy.
Term life insurance gives you financial protection for a set period of time. The period of (or term) set for the policy can be 1 year, 5 years, or more. If you die during that period, the face amount (dollar amount) of the policy is paid to your beneficiary (the person you decide will get the money). If you live to the end of the term, no money is paid to you, and the insurance ends. Term insurance does not offer savings, investments, or loan features. It pays only if you die during the term of the insurance. One kind of term insurance lets you renew the policy each year without a medical checkup. But the premium (payment) increases as you grow older. Other kinds of term insurance state that you must have a physical checkup by your doctor to renew the policy.
Term insurance also may be convertible. Convertible means you can switch to permanent insurance without being checked by a doctor. Decreasing term is another kind of term insurance. With decreasing term, the premiums stay the same, but the benefits (amount paid when you die) decrease over a set period of time. Decreasing term is also called "declining balance term insurance."
Credit life insurance is one kind of decreasing term. It is usually sold as part of a loan you make from a bank or finance company. It pays off the balance of the loan if you die before making the last payment. This kind of insurance protects the lender in case you are not able to pay off the loan because of death. Credit life often costs more than regular term insurance. Shop around when buying insurance to cover a loan. You probably can get regular term life insurance for less money than credit life.
When you start making premium payments, term insurance costs less than other kinds of policies for the same amount of coverage. The cost of term insurance increases as you grow older.
Term insurance is relatively cheap especially if you don't have many assets or emergency reserves, but do have financial dependents. Many term policies offer a guaranteed renewable clause which means your right to renew the policy is unrestricted.
Disadvantages
Disadvantages of term insurance include the fact that premiums increase at the end of each renewable term because as you get older the chances of your dying increase. Consequently, term insurance may become too expensive in later years.
Situations where term insurance may be the best option include:
1. You just want life insurance protection but at the lowest rate possible.
2. You have other assets and investments for retirement and do not plan to use life insurance to cover that need. If fact, you do not plan to need any life insurance protection after age 60.
Life
Health Savings Accounts
You can use this account to pay for your qualified health expenses, including expenses that the plan ordinarily doesn’t cover, such as eyeglasses and hearing aids.
Expenses paid out of the HSA that are eligible expenses under your high-deductible health plan will count toward the plan’s deductible.
