Is it worth it to keep a small life insurance policy?
UPDATED: Mar 8, 2011
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Asked March 8, 2011
Many people keep more than one life insurance policy, and the most common type of policy for older adults is a small life insurance policy that covers final expenses and not much more. Small policies are easier to afford and can be fit into most budgets, making them more appealing to those on a limited income.
Term life policies are primarily used to protect a particular investment or goal in the event of your death. This could be something as small as buying your little girl a pony when she's old enough, or paying off the family home. Term life policies tend to be more or less expensive according to the length of the policy, with short-term policies carrying higher policies and long termed policies being some of the most affordable life insurance available. In term life, a small policy with a long term could mean you pay more than the policy is worth, so be sure to weigh the total cost of the policy against the potential payout before contracting a long-term, low-value life insurance policy.
Whole life policies intended to pay final expenses can be purchased and paid out earlier to save money. Some types of whole life policy even make it possible to pay in an initial lump sum and allow the policy to pay it's own premiums afterward. Before investing in any life insurance policy, look at the final pay out, the benefits of the policy, and your regular premiums carefully to make sure that the potential returns outweighs the cost of maintaining the policy. This rule applies to large value policies as well as small ones, but the contrast is often more noticeable with small policies.
Answered March 8, 2011 by Anonymous