Car insurance is generally bought in case something were to happen to one's car. Life insurance is bought in case something were to happen to one's life. But what makes the policies differ in price and quality?
Life Insurance Cost
Generally, life insurance policies are measured out in years, the most common increment is 10 years. For example, if the monthly premium on a 10 year policy is $10, then after 10 years, the total cost would appear to be $1,200. However, that money is set aside over the years as payments. If that money were instead invested in $10 increments every month over that 10 year period, and that investment made about a 10% return annually, then the investment would have grown to over $2,000. Looking at it this way increases the cost of such a policy by about two thirds. The true costs of life insurance, therefore, depends on what one would otherwise do with the money put into the premiums - and depend on how well any supposed investments actually perform.
Cheap Life Insurance
In general, what makes life insurance cheap or expensive has to do with breadth of the coverage (how many different kinds of causes of death it covers,) the amount of the coverage (how much it pays out if the insured person dies), and the mitigating factors that increase risk, such as gender, age, smoking, or a history of health problems. Being male increases the cost of insurance for two reasons: Men have shorter lifespans than women, and men are more likely to engage in risky or "daredevil" behavior.
The Best Life Insurance
Many people seek to find the "best" life insurance, but "best" is a very subjective term. Some people think getting the largest coverage with the smallest premium is the best coverage. Others think the best is having enough coverage for an emergency, and then trying to get the cheapest rate. Still others may want to find a plan that does not penalize them as much for whatever risk factors they may have.
Types of Life Insurance
Explaining all the details of every kind of life insurance lies beyond the scope of this article, but there are several kinds, including whole life, universal life, and variable life. Some of these kinds even allow the investor to add money into a savings account that accrues interest over time. It is important to discuss the differences between these kinds of policies with an insurance agent or agency before making a purchase.
Though the cost of life insurance can be measured in premiums, the true cost may be more difficult to measure. Insurance prices vary, and depend on factors such as sex and age. Different people will have different ideas in mind when they try to find out which kind of insurance is the best. In addition, there are several different kinds of life insurance policies that should be studied carefully before making a final decision.
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