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Insurance
Life insurance
helps to ensure that your family and loved ones are
protected against financial difficulties in the event of a premature
death. Combined with investments, retirement and estate planning,
life insurance is a fundamental part of a sound financial plan. With
the help of an insurance professional you can develop a complete
plan that will protect you and your family. This section gives you
basic information about various types of life insurance.
There are many available
forms of insurance, but they generally fall into two categories:
- Term Insurance
- Cash Value
Insurance
Term Life
Insurance
Term insurance is relatively
cheap especially if you don't have many assets or emergency
reserves, but do have financial dependents. Many term policies offer
a guaranteed renewable clause which means your right to renew the
policy is unrestricted. Benefits are only paid if the insured person
dies within the period specified in the insurance policy. The main
disadvantage with this type of policy is that the monthly premiums
may increase as the insured person get older. The main types of term
life insurance are:
- Renewable Term. Gives protection for one
year and must be renewed every year. Premium increases every year.
- Level
term . Gives protection for a specific number of year.
Premiums in this type of policy stay constant throughout the term
of the policy.
- Decreasing
Term. Gives protection at a
decreasing amount of insurance each year for a fixed premium.
- Convertible term. Allows shifting to a cash
value policy.
Cash Value
Insurance
Cash value offers protection
as well as an investment option. Because you are paying for
protection, savings, and the insurance company's administrative
fees, cash value insurance is more expensive than term insurance.
The accumulated sum of the savings, identified as the cash value, is
tax-deferred. There several types of Cash Value Policies. They
are:
- Whole life insurance gives death
protection for as long as you live. The most common type is called
straight life or ordinary life insurance, for which
you pay the same premiums for as long as you live. These premiums
can be several times higher than you would pay initially for the
same amount of term insurance. But they are smaller than the
premiums you would eventually pay if you were to keep renewing a
term insurance policy until your later years. Although you pay higher
premiums, to begin with, for whole life insurance than for term
insurance, whole life insurance policies develop cash
values which you may have if you stop paying premiums.
- Universal life
insurance is a combination of term protection with the
cash savings value of whole life. Interest rates paid on the cash
value are typically higher with universal life than whole life
because they tend to follow the markets. This type of contract is
designed with flexibility in mind. Premiums can be paid in a lump
sum, annually or anywhere in between. Interest on the cash value
is usually guaranteed, but will vary according to the investment
performance. Each month deductions are made from the cash value
fund to support the costs of the insurance protection. As long as
the cash value is substantial enough to maintain the monthly
costs, the policy will remain in force, cash value is accessible
through loans and withdrawals that will reduce cash value by the
amount borrowed plus interest. Withdrawal and/surrender charges
may also apply.
- Variable
Life Insurance is another interest-sensitive
form of insurance. The purpose of variable life is to combine the
protection features of life insurance with the investment
potential of common stocks. The key to this sort of policy is that
the death benefit is completely variable. The insured has the
option of choosing between several different investment mediums:
stock funds, bond funds, real estate funds, or any combination.
These contracts do provide a minimum guaranteed death benefit. The
actual death benefit could be higher depending upon the
performance of the investment vehicle chosen. Because it does rely
upon the market?s growth, the cash value also fluctuates. There is
absolutely no guarantee to the amount of the cash value. Unlike
universal life, the premiums paid are fixed. There are policy
provisions that allow loans to be made from the cash value. Cash
value is accessible through loans and withdrawals that will reduce
cash value by the amount borrowed plus interest. Withdrawal and/or
surrender charges may also apply. Variable products are sold by
prospectus which provides detailed information about fees and
expenses. Performance of variable products will fluctuate with
changes in market conditions and may lose value.
- Variable Universal Life. Variable
Universal life combines the growth potential of stocks with a
guaranteed death benefit. This type of policy allows premiums to
be paid, reduced, or skipped at any time, and the contract will
not lapse as long as sufficient cash value exists. The cash value
fund can be split between different investment mediums such as
stock, money market, and bond funds.
- Survivorship Life Insurance is a type of whole
life insurance which insures two people and pays benefits only
after the second person dies. It is generally designed to provide
funds to pay estate taxes. Also called second-to-die life
insurance, "joint and last survivor" and "last-do-die"
insurance.
Rates and coverage vary form state to state. Shop
around on your own and compare. It's amazing how much rates may
vary from company to company for the same type of coverage. For free
life insurance quotes and rates on life insurance visit one of the sites
below.
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Shopping around for Life Insurance Quotes is the best way to save money on your insurance.
You can compare free online insurance quotes from many of the
nation?s leading insurance companies.
We offer quotes for auto
insurance, term life insurance, homeowners insurance,
individual health insurance and more.
Each of these insurance companies below offer free quotes on a wide range of
insurance choices. To make sure you get the most competitive
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