Life Insurance

Life Insurance

Choosing The Right Life Insurance Policy

Life insurance is designed to provide a beneficiary with a sum of money upon a policyholder’s death. The sum is based on the contract between an insurance company and the policyholder as well as the amount of premiums paid. A life insurance premium can be paid on a regular basis or with a one lump sum payment. Costs such as funeral expenses can be included as part of the benefit provided by the insurance policy.

Life Insurance Categories

There are two different major categories of life insurance. Protection policies are made to provide a lump sum benefit if a specific event described within the policy occurs. A common form of this type of life insurance is term insurance. There are life insurance policies designed for investment. The goal for this type of life insurance is growing capital by the payment of premiums. Common forms of this type of life insurance are universal life, whole life, and variable life. These policies can be permanent life insurance, which does not require renewal.

Term Life Insurance

This life insurance does not provide a policyholder with an investment component. It is designed to provide coverage for a specified period of time when premiums are paid in accordance with the policy. There is annual-renewable term life insurance. This type of life insurance is purchased by a policyholder on a year to year basis. This renewal should not be based on providing evidence of good health. Young people are able to purchase annual-renewable term life insurance for very low premiums. The cost of premiums for this type of life insurance will increase as a person gets older.

Universal Life

This is a type of life insurance that provides the lump sum payment benefits of term insurance as well as a type of money market investment. This insurance is able to provide a market rate of return for the policyholder. Universal life insurance will not guarantee a specific rate.

Variable Life

There are variable universal life policies as well as variable life policies. They are permanent policies. There is an investment element that is part of this type of life insurance. The amount of financial return a policyholder receives is not guaranteed.

Whole Life

This is a type of permanent insurance. It provides life coverage as well as an investment fund. This type of life insurance will pay a specified amount upon the death of the policyholder. A portion of the policyholder’s premiums is given toward creating cash value based on investments made by the life insurance company. The cash value is annually tax-deferred every year the policyholder pays the premium. It’s possible for a policyholder to borrow against the cash accumulation within the whole-life insurance account and not be taxed. The amount of a premium will normally not change during the term of the insurance contract.

Choosing A Life Insurance Provider

Experts agree a person should choose a life insurance company that best accommodates their health situation and lifestyle profile. There are a number of companies who provide life insurance. Individuals should do all the research necessary to determine the best life insurance provider for them. It’s important to know the company’s reputation within the industry as well as their rating with the Better Business Bureau and more. It’s important to choose the best life insurance product based on age, premiums as well as the level of insurance protection desired.