Life Insurance
Life Insurance Policies
Do you know what your most important insurance policy is? Most people believe it’s their auto or home insurance. I guess the importance can depend on who you ask. Whatever the case may be, Life Insurance is the one policy you are guaranteed to use. There are two types of Life Insurance policies: Term Insurance and Permanent Insurance. Each type has several sub-policies as well.
The type of policy you choose is dependent on various factors such as budget, amount of coverage and length of coverage, type of individual being insured, heath and financial situation, and other circumstances. It’s always best to speak with a life insurance professional to determine which coverage is best for you and your family. A life insurance agent typically completes a needs analysis test that determines the amount of coverage you need to insure based on these factors. The initial application will include questions regarding your health and occupation, possibly followed by a health examination depending on the type of policy and/or amount of coverage. Below are typical life insurance policies on the market.
Term Life Insurance
Term Life Insurance is designed to be a temporary solution at a more affordable cost. Depending on the insurance company, you can typically buy policies lasting 10,20 or 30 years. Once the policy expires, you can usually renew on a annual basis at an increased rates. There are two types of Term Insurance.
- Level Term Insurance – The death benefit stays the same for the insured period.
- Decreasing Term Insurance – The death benefit decreases typically on a yearly basis.
Permanent Life Insurance
Permanent Life Insurance is meant to give a life long protection, unless the policy is canceled. The rates are considerably more than Term Insurance but offers cash value that accumulates on a monthly basis. You can barrow against the policy and pay back or let subtract from face amount payout. There are several types of Permanent Life Insurance polices:
- Whole Life – Fixed premiums for duration of the policy and cash value accumlation.
- Universal Life – Flexible premiums payments and options to increase death benefit coverage and cash value.
- Variable Life – Flexible premiums and death benefits. Allows you to invest premiums in stocks and bonds.