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Life Insurance Policy
By MEGHAN of Bigplanners.com
Basically, all life policies are either term or whole life insurance,
or a combination of the two. However, there are many different forms or variations of life
insurance policies.
With universal life insurance, you are able adjust the premium and the policy to the amount you
think you need.
For a person who wants to have control of the financial and investing aspect of their
policy, their option will be a variable life policy.
So, What Is A Term Life Policy?
As the name suggests, a term life policy provides protection for a precise
period of time, such as 5, 10, or 20 years. At the end of the term period, the policy expires
with no accumulated cash value, and no benefits are payable. The death benefit is only paid if
you die during the term period. Term policy can also be defined as "insurance that is
actuarially designed to expire before you do."
Although the premiums on term are generally low, they increase substantially as your
age increases. Due to this reason, a term life policy is the most economical when
purchased at a younger age and when the term is longer. Although the short term renewable policies
would initially be less expensive, the premiums start to increase significantly after middle age.
As an illustration, in an annual renewable term policy with a $200,000 death benefit,
the annual premiums might look something like the example below. Remember, these are just
examples to show the difference of cost with age.
$300 / year age 35
$900 / year age 50
$2,500 / year age 65
What Is A Whole Life Policy?
Whole life is the most common type of life sold. A whole life
policy remains in force until you either die or reach age 100, as long as you pay the premium as
scheduled. Whole life is also known as ordinary life, or permanent insurance. The main
characteristics of a whole life policy are level premiums, level face amounts,
guaranteed values, and a relatively high degree of safety. Whole life builds a living
benefit through its guaranteed cash value. This enables the policy owner to access this cash for
emergencies, as a supplemental source of retirement income or for any other needs.
Another important feature of whole life is that it includes both and a
savings aspect. Whole life insurances are often used for long term financial planning. The policy's
other positive feature is the level premiums. So basically you always know what the cost of
will be, and you never need to be worried about your monthly premiums going up, thus giving you some peace of mind.
The risk factor of a whole life policy and company is much different than it is for
something like an auto policy. When an company issues an auto policy, it hopes that the
policy holder will be a safe driver and will never be in an accident. On the other hand, when an
insurance company issues a whole life policy, it knows it will someday be called upon
to pay the claim.
It is now very easy and convenient to shop around and compare the many different companies and
policies online. This will ensure that you get the best premium that meets your needs. It is
worth it to take time to get several life quotes and check to see how they are rated
with the BBB. It's important to look into the financial standings of the companies you
are considering before you sign up for any type of life policy. If you do your part of
getting all the necessary information, you will easily get the best whole life policy
online.
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