Life Insurance Information

A term life insurance policy covers the life of the policy holder for a certain period of time ranging from 1, 5, 10, 15 to 20 years. For this reason, this policy is also called temporary life insurance policy. It pays the cash benefits back to the policy owner once the term is over and in case the owner dies before the maturity of his term, the insurance company pays cash benefits to the beneficiaries. Once the term is over, the policy can not be renewed so there is no cash benefit, if the policy holder dies after the maturity of the term. Sometimes term policies are called pure insurances since there is no financial investment value and most of the premium goes to pay for coverage.

There are a number of different term policies. An overview of all is as follows:

Annual renewable term insurance: This policy is renewable each year up to a particular age limit. As you grow older, your chances of dying increases and accordingly the premiums go up each year with every renewal.

Renewable term insurance: This plan allows you to renew your coverage after the term of the policy is over, which generally vary from 5 to 20 years. Since your health condition may deteriorate during the term, your renewal power can be a valuable feature. As it involves more risk from the point of view of the company, Renewable term insurance costs higher than annual renewable term insurance.

Level premium term insurance: It ensures your premium will stay the same every year for the term of your policy.

Decreasing term insurance: With this policy, the cash benefits decrease each year while your premiums remain level during the term.

Convertible term insurance: It enables you to convert your term insurance into any of the other types of insurance policies, offered by the company.

Accidental Death Insurance: It covers you and pays out a cash benefit if you die in an accident.

Disadvantages:

It doesn’t provide a cash value for later life like retirement.

It doesn’t provide your whole life’s insurance protection.

A whole life insurance policy, unlike the term life insurance policies, covers the entire life of the policy holder till the end of his life. So there is no fixed period of time to cover your life, unlike the term life insurance policy, which protects your life for a certain point of time. The cash benefit, associated with whole life insurance policy is called death benefit. As the policy maker dies, the death benefits will be paid to the person pr persons, mentioned as his beneficiaries in his policy. Apart from guarding your life throughout your whole life, a whole life insurance policy is affordable too. As plenty of people apt for whole life insurance policy every year, the premium remains the same. This feature helps many older people to ensure their life on a fixed income as well as with a fixed premium. More over, those, who are concerned about what would happen to their families when they will die, the whole life insurance policy is best, as the policy returns a huge amount to the beneficiaries after the death of the policy owner.

There is a basic difference between whole life insurance and term life insurance. Unlike term life insurance, the whole life insurance offers cash value over time. If you cancel the policy after a certain period of time, the insurance company will then surrender the cash value to you. The cash value is scheduled to be equal to the face value when the policy holder reaches the age of 100. If the policy maker lives that long, the insurance company will be bound to pay the face value to him in a lump sum.

You can also borrow some amount of the cash value as a loan. Even though the money has to be paid back, but there is no approval process and no risk of being turned down yet. In this way, you have become your own lender. Some whole life insurance policies even pay dividends. So if you can use it to supplement your retirement income.

None wants to live his last life as a burden to his children. Senior life insurance policy is especially designed for elders. The best premium rates are offered to seniors by the insurance companies, who pass a health exam, while many companies offer insurance with no exam required. These policies are popularly known as Guaranteed Acceptance Life Insurance. These plans will pay a full death benefit in case of accidental death as soon as the policy comes into effect. However, the policy will pay a limited death benefit if the policy holder dies of natural causes during the first two years of the making of the policy. The partial death benefit usually consists of the premiums paid plus interest. Once the two-year waiting period is over, the policy holder gets fully insured.

There are many life insurance plans for seniors:

Term Life Insurance for seniors: It has been seen that some elderly persons with fixed incomes, do not look for a life insurance, which will give him an investment opportunity. Their primary look out is decreasing the burden of their death on their survivors. For them, term life insurance policy is best.

Whole Life Insurance for seniors: With the advent of improved medication, diet and healthcare, seniors are actually enjoying a better life expectancy. With this, there is always a risk of outliving your term life insurance policy. A whole life insurance will cover the elders for their whole lives. The best feature of this plan is that it has a fixed premium. But even if it offers a fixed premium for the entire life, whole life premiums are higher than term life premiums.

Single-pay Insurance policy for seniors: If the policy holder has accumulated more than enough wealth and is planning not to use it for living expenses, he may consider single-pay insurance policy. This plan allows him to leverage his money for his heirs. With this plan, a $100,000 policy, paid for with a single premium can turn double or even triple in value overnight. The death benefit can also be structured to be paid tax-free.

Most of people are very much aware about the Life Insurance and its benefits. But knowing about such a policy and buying one are different from each other. There are many factors which need to be considered and analyzed before buying an insurance policy. As each and Every person expects something different from it and companies also offer different packages according to the requirement of the users.

Getting the right deal is as important as getting the insurance. On a broad classification there are four major life insurances available to the users in the recent market; they are the Term life, the Whole life, the Universal Life and Variable Universal Life. They all have been designed keeping the requirements of different users in mind and vary in many aspects. The Term Life is the cheapest insurance that one can get and it is also the simplest and carries only the essential requirements of the insurance. The premium for Term Insurance is very low and also there are no dividends on the term life policy. The recipient gets the required amount in case the insurer dies. The premium for term insurance is low because the insurance company does not have to recompense back very often.

Term Life policy itself comes in two separate forms; they are the decreasing term policy and the level term policy. The premium keeps on decreasing in decreasing term policy. The actual amount depends on the benefits and other terms of the policy. This is the most economical policy available and is even cheaper than the level term life policy. On the other hand, the level term life policy does not decrease in amount where the premium for this policy remains constant. Second type of policy is the whole life insurance which is more expensive and the premiums under this policy can be even two times or more than that under term policy. The premium money gains value through dividend. Universal Life Insurance is a combination of both the term life policy and the whole life policy. It provides the policy owner an option to increase amount of the premiums at a later stage. This is all about securing the life.

A number of people avoid life insurance just because they do not know what it is all about and many people wonder by saying, “What are the benefits of life insurance?” Life insurance is an imperative part of most people’s sound financial plan. Especially for younger and a fresher in career or still in the wealth accumulation stage are the most beneficial. Life insurance often gets overlooked because there’s no law requiring it; many people don’t like idea about their own death so they avoid it; it’s not “tangible” so people can have dilemma seeing its value;

When people think about financial matters they have a preference to reflect of their own accumulation, not paying somebody else “just because they die”; Some people get upset at the thought of “putting a price on their life”, even though that’s not at all what life insurance is about. But with life insurance, one gets an instantaneous estate created. Protecting the loved ones from the financial effects of any untimely death, one could also be protecting own legacy by using life insurance as a “key man” policy in a partnership  business, or use life insurance as part of estate planning for “rich”.

Life insurance is expected to be suspiciously planned out between a the customer  and his/her agent or a financial planner so that the customer can figure out the amount of death benefit that he/she needs to protect the spouse, children, etc from awful consequences of their untimely death and In this regard, most people are underinsured usually. The true recommendation is that one should carry anywhere from eight to 20 times his/her current income as their face value on the policy. This may sound extreme, but think about the consequences of the untimely death.