Types of Life Insurance Policies

Life insurance is one of the most important investments a person can make. This type of insurance gives people a way to provide for their families once they have passed. They can help their family by paying off outstanding bills such as a mortgage or credit card bills. A well, it can provide for the children’s educational future.

There are many different types of life insurance policies available on the market. Before you select a insurance policy, you should be aware of the different types.

The following is a list of the different types of life insurance policies:

Term Insurance: Term life provides a death benefit for only a specified period of time. If one dies during the coverage period, the beneficiary will collect the death benefit. If a person lives beyond the set term period, the coverage will end and the policyholder will not get any of the money back. The number of years of coverage can range from one to thirty. Term life insurance is the most affordable insurance choice for young and healthy people. It is important to remember that if the policy expires and you want to renew, you will have to pay a higher premium because you will be much older, and maybe even have some health problems.

Whole Insurance: This type of insurance contains a fixed premium and is considered the most simple permanent life insurance policy. The premiums are paid once each year. It has a savings element that earns cash value. When making premium payments, one will pay more than is required to cover the current costs of insurance coverage. The surplus payment is put in a cash value account. The policyholder has no say in where the money is invested. Whole life insurance will remain intact for as long as the person is alive.

Universal Insurance: With this type of insurance, reducing or increasing premiums will effect the growth of the cash value element and maybe even the death benefit.

It allows the policyholder to transfer funds between the insurance and savings parts of the policy. The Premium rates are flexible.

Variable Insurance: This policy gives the policyholder control over how often and how much the premium payments will be. There is no guaranteed minimum cash value or death benefit. As well, this type of policy gives the policyholders control over where their savings are invested. This policy contains a number of investment choices called sub-accounts which are managed by professionals. If the cash value account goes over a specific amount, the death benefit will increase. Premiums with this policy are fixed.

Universal Variable Life: With this type of policy, the flexibility of universal life is combined with the investment control of variable life. The amount of the final death benefit and cash value depends on investment performance.

No matter which life insurance policy you choose, you get to decide how it can be used to help loved ones after you have passed. Understanding what types of insurance policies are available will go a long way in ensuring your loved one’s future will be sustained.

Full service brokerage offers corporate and personal insurance solutions. When looking for the best protection and information on Car insurance Whitby, Home Insurance, Life Insurance Whitby options.

Life Insurance FAQ:

Question: Life Insurance?
My father decided to buy life insurance on me and my daughter. I’m 21 and I’ve been married for 3 years and I was wondering if he bought it, would my husband be able to buy it for me too? I’m really confused to why my father decided to buy it for me.

Answer: Yes. Anyone who you give permission to, who has an insurable interest, can buy life insurance on you. There’s no “limit” to the number of policies you can have.

Question: What type of life insurance policy does the military offer?
I’m talking about the Army, in particular. Is it term life insurance, or permanent life insurance?

Answer: SGLI is considered term life insurance, since it only covers active duty service members during the period of active duty. It can be converted to VGLI, which is permanent life insurance.

Question: What is the difference between ordinary life insurance and term insurance?
I heard about “term insurance” whose meaning is not clear to me. Can anybody please explain what is the difference between ordinary life insurance and a term insurance? What are the advantages and disadvantages of the two?

Answer: Term Life Insurance provides death benefit protection for a specified period of time. Term life insurance is a good choice if you are young, can’t afford the much-higher costs of whole life insurance, and have financial obligations that will disappear in time, such as a car loan or mortgage.

Whole Life (Ordinary Life) Insurance provides protection for your entire life. The premiums are much higher than for term insurance, and they are stretched out over a period of time. Once your policy is paid up, the insurance company invests excess dollars for you. In addition to providing protection, the policy becomes part of your savings plan.

An ordinary life insurance policy is a combination of a term insurance policy and a “savings account.” The policy owner pays a level premium, which is usually higher in the early years, and excess amounts are used to fund the savings account (also known as the cash value). Ordinary life insurance allows the policy owner to choose one of the following options, even if the insured doesn’t die.

-receive some of the premium back in the form of a low-cost policy loan
-surrender the policy for cash
-receive a reduced life insurance benefit at death
-continue the current life insurance benefit for a reduced time period

Question: What does it mean when your life insurance company asks for a claim form?
My dad passed away, my mom has sent in all the paperwork the life insurance company asked for. Now they are requesting additional info.. They say they need a claim form.Can anyone tell me what this means?

Answer: The person from the insurance company who’s asking for this additional information can probably tell you exactly what this means. Ask them what it is they want.

Question: Does life insurance cover someone who has been murdered while serving a prison sentence?
And what about the distribution of the proceeds of that life insurance if he is covered? Should some go to the victims of his crime as compensation? And also, if someone is proven guilty of another crime after his death, does that effect the distribution of his other assets–should his victims get some of this if they have suffered sufficiently from the crime?

Answer: Whether life insurance would be paid on a murder depends on the terms of the insurance. As to whether there would be money going to victims, that depends on any civil case against him and the terms of the insurance. If he has a named beneficiary to his insurance, the money goes to them, it does NOT go to his estate. If there is no beneficiary named, then his estate claims the money. If victims have a civil judgment against him, they will have access to the money. It is not automatic, and would only apply if there were a standing judgment against the criminal. Future victims found would not benefit. Once the money was distributed, presumably before another claim could develop, it is gone.

Question: What life insurance should I get for my mom?
I am 18 and have a steady income, it’s not a whole bunch but it is steady. My mom does not have life insurance, and says she can’t afford it. I have decided maybe I should get her some and I heard there is life insurance where I can pay between $20-70 a month. Is this true? Where do I look and start, and what company do you suggest?

Answer: Yes, you can talk to a life insurance agent/broker to learn more. Google one in your area.

However, is there a reason that your mom needs life insurance. Life insurance does not help her, it helps her heirs. If all her children are grown and supporting themselves there is little need for there to be life insurance on her. You may want to have a small funeral policy on her, to cover any funeral expenses.

If she will be responsible for your funeral expenses in the event that you pass away prematurely, you should either make sure you have enough money saved for that or have a small life insurance policy on yourself.

Remember, debt dies with the deceased, unless there is a joint account. Or the reason for the debt continues to be needed after the person dies (for example: a mortgage or car loan that someone else wants to keep the property).

Question: What is the difference between whole life and term life insurance policies?
My husband wants to take out an insurance policy on himself for our family due to the fact that he is the primary source of income. We have been researching life insurance policies..what is the difference between whole and term life? My husband is 8 years older than me so he wants to make sure that myself and our children are taken care of in the event of his death.

Answer: Term life insurance is just like car insurance. If you have a claim the insurance company pays and if you don’t your money is gone. The life insurance is just there in case you die.

Whole life is more expensive and has a savings portion called cash value. It is NOT an investment and should not be used for that purpose.

Term is cheap and whole life is not.

Question: Where can I get good life insurance with heart disease 3 years ago?
I had open heart surgery in 2006 and I need some affordable life insurance.

Answer: Surgery three years ago would probably not be sufficient cause for a decline, but it will likely eliminate any possibility of preferred rates. As long as you are relatively young and healthy, and the surgery was successful in correcting your condition, you should have little problem getting underwritten by any carrier.

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