Types of Life Insurance you can Buy

Term life is a great way to buy pretty inexpensive insurance with a high amount of coverage is you are a young person. It carries with it a subscription type fee that occurs (usually monthly), meaning once you pay, it is money down range that you never can get back. As you get older the monthly price goes up considerably and can become unaffordable very quickly.

The other is whole life insurance. This type of insurance is more expensive initially, but has a cash value associated with it. The more time that you have the policy the higher the cash value (nothing near the amount of the insurance payout amount). Once you have the policy and keep up with the payments for the policy it can never be rescinded and you will be eligible to increase your policy at various times through the live of the policy. The other nice thing about whole life insurance is that the rates only change when you change the amount of coverage that you want.

With all of this being said, both have their advantages and disadvantages. If the death tax is rescinded in 2010, having life insurance is a must in order to take care of the family in the event of an unplanned death. When a person dies and the estates is worth $750,000 or more, you can expect to see half of it go to Uncle Sam. So say for example, that you have a home (and the land that it sits on) valued at $750,000 you have to pay $375,000 cash to the government within a very short time of the death. Most people don’t have that much money in the bank or in assets that they can liquidate quickly. So you end up having to sell the property for $400,000 to $500,000. This is a loss of over $600,000 in the best scenario to the assets that you have worked your whole life to acquire. Talk about adding insult to injury.

Of course the really rich people, don’t have to worry about this because they can afford to have big time tax lawyers shelter their assets. So the Bill Gates’s and the Paris Hilton’s of the world don’t pay a dime in death taxes.

The death tax is the most immoral tax that exists today in the US, but as long as it exists, you need life insurance.