Six Basic Types of Life Insurance
Regardless of exactly how fancy the policy title or sales presentation might appear, all life insurance policies contain benefits derived from one or more of the three basic kinds shown below. Some policies do combine a few kinds of life insurance which makes it confusing.
Term Life Insurance policies
Endowment Life Insurance
Whole Life insurance policy
Variable Life Insurance
Universal Life insurance policy
Variable Universal Life Insurance
Term Life Insurance
Term life insurance is a loss of life protection for a term of one or more years. Some companies offer policies with terms as much as thirty years. Premiums on term insurance remain level throughout the life of the policy and the account has no cash value. Death benefits will be paid provided that you die within that period of time. Term insurance generally provides the largest immediate death protection for the premium dollars paid.
Some term life insurance policies are renewable for one or more additional terms even if your health has changed. Each time you renew the policy for the new term, premiums will always be higher. You should check the monthly premiums when you get older and see and how much time the policy can be continued.
Some term insurance policies can also be convertible. This means that prior to the end of the conversion period, you may trade the term policy for the whole life or endowment insurance policy although you may not be physically healthy. Premiums for the new policy is going to be higher than you have been purchasing the term insurance.
Life Insurance policies "Endowment"
An endowment insurance policy will pay a sum or income for the policyholder, if you live to a certain age. If you were to pass away before then, the death benefit would be paid to your beneficiary. Premiums and cash values for endowment insurance are higher than for the same amount of whole life insurance. Thus endowment insurance offers you the least amount of death protection for ones premium dollar.
Whole Life Insurance policies
Whole life insurance gives death protection for as long as you live. The most common type is referred to as straight life or ordinary life insurance, for which you pay the same premiums for as long as you live. These premiums might be several times higher than you should pay initially for the same quantity of term insurance. But they are smaller compared to premiums you would eventually pay if you keep renewing term insurance policies until your later years.
Some whole life policies let you pay premiums for the shorter period such as 10 years, or until age 65. Premiums for these policies are higher than for ordinary life insurance because the premium payments are squeezed in a shorter period.
Although you fork out higher premiums, to begin with, for whole life insurance compared to for term insurance, whole life insurance policies develop cash values which you may have if you stop paying premiums. You can generally either take the amount of money, or use it to invest in some continuing insurance protection. From a technical perspective, these values are referred to as nonforfeiture benefits. This refers to benefits you can't lose or forfeit when people stop paying premiums. The amount of these benefits depends on the amount of policy you have, its dimension, and how long you have owned it.
A policy with cash values doubles as collateral for a bank loan. If you borrow from the life insurance company, the rate of interest is shown in your policy. The amount of debt on your policy loan would be deducted from the benefits in the event of your death, or on the cash value if you were to quit paying premiums.
Variable Life Insurance policies
Variable life insurance, provides permanent protection in your case and death benefits to your beneficiary upon your death. The value of the loss of life benefits may fluctuate up or down with regards to the performance of the investment percentage of the policy. Most variable life insurance policies guarantee that the death benefit won't fall below a specified minimal, however, a minimum cash worth is seldom guaranteed. Variable is a sort of whole life insurance and because of investment risks it is usually considered a securities contract and is also regulated as securities under the actual Federal Securities Laws and have to be sold with a prospectus.
Universal A life insurance policy
Universal Life insurance is a variation of Whole Life. The insurance part of the policy is separated on the investment portion of the coverage. The investment portion is purchased bonds and mortgages, the investment percentage of Universal Life is invested throughout money market funds. The cash value percentage of the policy is set up as a possible accumulation fund. Investment income is credited on the accumulation fund. The death benefit portion is paid for out of your accumulation fund. Unlike Whole life insurance policy, the cash value of Universal life insurance policy grows at a variable fee. Normally, there is a guaranteed minimum interest rate applied to the policy. Regardless of how bad the investments are, you are guaranteed a clear minimal return on the funds portion. If the insurance company does well with its investments, the interest return from the cash portion will increase.
Variable-Universal Life
Variable universal life insurance will pay your beneficiary a death profit. The amount of the benefit would depend on the success of your investments. If the investments fall short, there is a guaranteed minimum death benefit paid to your beneficiary upon your death. Variable universal offers you more control of the cash value account percentage of your policy than any different insurance type. A form of whole life insurance has elements of both life insurance and a securities contract. As the policy owner assumes investment pitfalls, variable universal products are regulated as securities underneath the Federal Securities Laws and have to be sold with a prospectus.
Rates and coverage vary form state to convey. Shop around on your own and talk with an independent insurance agent to be certain you get a plan that is right for you. It's amazing simply how much rates may vary from company to company for the same coverage.
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Monday 19 August 2013
Basic Types of Life Insurance
Six Basic Types of Life Insurance
Regardless of exactly how fancy the policy title or sales presentation might appear, all life insurance policies contain benefits derived from one or more of the three basic kinds shown below. Some policies do combine a few kinds of life insurance which makes it confusing.
Term Life Insurance policies
Endowment Life Insurance
Whole Life insurance policy
Variable Life Insurance
Universal Life insurance policy
Variable Universal Life Insurance
Term Life Insurance
Term life insurance is a loss of life protection for a term of one or more years. Some companies offer policies with terms as much as thirty years. Premiums on term insurance remain level throughout the life of the policy and the account has no cash value. Death benefits will be paid provided that you die within that period of time. Term insurance generally provides the largest immediate death protection for the premium dollars paid.
Some term life insurance policies are renewable for one or more additional terms even if your health has changed. Each time you renew the policy for the new term, premiums will always be higher. You should check the monthly premiums when you get older and see and how much time the policy can be continued.
Some term insurance policies can also be convertible. This means that prior to the end of the conversion period, you may trade the term policy for the whole life or endowment insurance policy although you may not be physically healthy. Premiums for the new policy is going to be higher than you have been purchasing the term insurance.
Life Insurance policies "Endowment"
An endowment insurance policy will pay a sum or income for the policyholder, if you live to a certain age. If you were to pass away before then, the death benefit would be paid to your beneficiary. Premiums and cash values for endowment insurance are higher than for the same amount of whole life insurance. Thus endowment insurance offers you the least amount of death protection for ones premium dollar.
Whole Life Insurance policies
Whole life insurance gives death protection for as long as you live. The most common type is referred to as straight life or ordinary life insurance, for which you pay the same premiums for as long as you live. These premiums might be several times higher than you should pay initially for the same quantity of term insurance. But they are smaller compared to premiums you would eventually pay if you keep renewing term insurance policies until your later years.
Some whole life policies let you pay premiums for the shorter period such as 10 years, or until age 65. Premiums for these policies are higher than for ordinary life insurance because the premium payments are squeezed in a shorter period.
Although you fork out higher premiums, to begin with, for whole life insurance compared to for term insurance, whole life insurance policies develop cash values which you may have if you stop paying premiums. You can generally either take the amount of money, or use it to invest in some continuing insurance protection. From a technical perspective, these values are referred to as nonforfeiture benefits. This refers to benefits you can't lose or forfeit when people stop paying premiums. The amount of these benefits depends on the amount of policy you have, its dimension, and how long you have owned it.
A policy with cash values doubles as collateral for a bank loan. If you borrow from the life insurance company, the rate of interest is shown in your policy. The amount of debt on your policy loan would be deducted from the benefits in the event of your death, or on the cash value if you were to quit paying premiums.
Variable Life Insurance policies
Variable life insurance, provides permanent protection in your case and death benefits to your beneficiary upon your death. The value of the loss of life benefits may fluctuate up or down with regards to the performance of the investment percentage of the policy. Most variable life insurance policies guarantee that the death benefit won't fall below a specified minimal, however, a minimum cash worth is seldom guaranteed. Variable is a sort of whole life insurance and because of investment risks it is usually considered a securities contract and is also regulated as securities under the actual Federal Securities Laws and have to be sold with a prospectus.
Universal A life insurance policy
Universal Life insurance is a variation of Whole Life. The insurance part of the policy is separated on the investment portion of the coverage. The investment portion is purchased bonds and mortgages, the investment percentage of Universal Life is invested throughout money market funds. The cash value percentage of the policy is set up as a possible accumulation fund. Investment income is credited on the accumulation fund. The death benefit portion is paid for out of your accumulation fund. Unlike Whole life insurance policy, the cash value of Universal life insurance policy grows at a variable fee. Normally, there is a guaranteed minimum interest rate applied to the policy. Regardless of how bad the investments are, you are guaranteed a clear minimal return on the funds portion. If the insurance company does well with its investments, the interest return from the cash portion will increase.
Variable-Universal Life
Variable universal life insurance will pay your beneficiary a death profit. The amount of the benefit would depend on the success of your investments. If the investments fall short, there is a guaranteed minimum death benefit paid to your beneficiary upon your death. Variable universal offers you more control of the cash value account percentage of your policy than any different insurance type. A form of whole life insurance has elements of both life insurance and a securities contract. As the policy owner assumes investment pitfalls, variable universal products are regulated as securities underneath the Federal Securities Laws and have to be sold with a prospectus.
Rates and coverage vary form state to convey. Shop around on your own and talk with an independent insurance agent to be certain you get a plan that is right for you. It's amazing simply how much rates may vary from company to company for the same coverage.
Regardless of exactly how fancy the policy title or sales presentation might appear, all life insurance policies contain benefits derived from one or more of the three basic kinds shown below. Some policies do combine a few kinds of life insurance which makes it confusing.
Term Life Insurance policies
Endowment Life Insurance
Whole Life insurance policy
Variable Life Insurance
Universal Life insurance policy
Variable Universal Life Insurance
Term Life Insurance
Term life insurance is a loss of life protection for a term of one or more years. Some companies offer policies with terms as much as thirty years. Premiums on term insurance remain level throughout the life of the policy and the account has no cash value. Death benefits will be paid provided that you die within that period of time. Term insurance generally provides the largest immediate death protection for the premium dollars paid.
Some term life insurance policies are renewable for one or more additional terms even if your health has changed. Each time you renew the policy for the new term, premiums will always be higher. You should check the monthly premiums when you get older and see and how much time the policy can be continued.
Some term insurance policies can also be convertible. This means that prior to the end of the conversion period, you may trade the term policy for the whole life or endowment insurance policy although you may not be physically healthy. Premiums for the new policy is going to be higher than you have been purchasing the term insurance.
Life Insurance policies "Endowment"
An endowment insurance policy will pay a sum or income for the policyholder, if you live to a certain age. If you were to pass away before then, the death benefit would be paid to your beneficiary. Premiums and cash values for endowment insurance are higher than for the same amount of whole life insurance. Thus endowment insurance offers you the least amount of death protection for ones premium dollar.
Whole Life Insurance policies
Whole life insurance gives death protection for as long as you live. The most common type is referred to as straight life or ordinary life insurance, for which you pay the same premiums for as long as you live. These premiums might be several times higher than you should pay initially for the same quantity of term insurance. But they are smaller compared to premiums you would eventually pay if you keep renewing term insurance policies until your later years.
Some whole life policies let you pay premiums for the shorter period such as 10 years, or until age 65. Premiums for these policies are higher than for ordinary life insurance because the premium payments are squeezed in a shorter period.
Although you fork out higher premiums, to begin with, for whole life insurance compared to for term insurance, whole life insurance policies develop cash values which you may have if you stop paying premiums. You can generally either take the amount of money, or use it to invest in some continuing insurance protection. From a technical perspective, these values are referred to as nonforfeiture benefits. This refers to benefits you can't lose or forfeit when people stop paying premiums. The amount of these benefits depends on the amount of policy you have, its dimension, and how long you have owned it.
A policy with cash values doubles as collateral for a bank loan. If you borrow from the life insurance company, the rate of interest is shown in your policy. The amount of debt on your policy loan would be deducted from the benefits in the event of your death, or on the cash value if you were to quit paying premiums.
Variable Life Insurance policies
Variable life insurance, provides permanent protection in your case and death benefits to your beneficiary upon your death. The value of the loss of life benefits may fluctuate up or down with regards to the performance of the investment percentage of the policy. Most variable life insurance policies guarantee that the death benefit won't fall below a specified minimal, however, a minimum cash worth is seldom guaranteed. Variable is a sort of whole life insurance and because of investment risks it is usually considered a securities contract and is also regulated as securities under the actual Federal Securities Laws and have to be sold with a prospectus.
Universal A life insurance policy
Universal Life insurance is a variation of Whole Life. The insurance part of the policy is separated on the investment portion of the coverage. The investment portion is purchased bonds and mortgages, the investment percentage of Universal Life is invested throughout money market funds. The cash value percentage of the policy is set up as a possible accumulation fund. Investment income is credited on the accumulation fund. The death benefit portion is paid for out of your accumulation fund. Unlike Whole life insurance policy, the cash value of Universal life insurance policy grows at a variable fee. Normally, there is a guaranteed minimum interest rate applied to the policy. Regardless of how bad the investments are, you are guaranteed a clear minimal return on the funds portion. If the insurance company does well with its investments, the interest return from the cash portion will increase.
Variable-Universal Life
Variable universal life insurance will pay your beneficiary a death profit. The amount of the benefit would depend on the success of your investments. If the investments fall short, there is a guaranteed minimum death benefit paid to your beneficiary upon your death. Variable universal offers you more control of the cash value account percentage of your policy than any different insurance type. A form of whole life insurance has elements of both life insurance and a securities contract. As the policy owner assumes investment pitfalls, variable universal products are regulated as securities underneath the Federal Securities Laws and have to be sold with a prospectus.
Rates and coverage vary form state to convey. Shop around on your own and talk with an independent insurance agent to be certain you get a plan that is right for you. It's amazing simply how much rates may vary from company to company for the same coverage.
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