An Intro To Life Insurance
There are many options available for life insurance, and for most people these options can be somewhat confusing. Below is a brief review of each type and some advantages and disadvantages of each. When choosing a policy it is important to look at the larger picture so that you make a wise choice in terms of cost, coverage and benefits.
Term life insurance
These plans provide monetary benefits only if death occurs within the time period that the insurance is set for. Term insurance is generally most affordable and offers additional savings for younger policy holders.
Permanent life insurance
This policy is a more long lasting option for insurance. The premiums are higher, but there is not a term on the length of time that the policy will pay out. Another benefit to these types of policies is that some companies take the profit and reinvest it and pay dividends to the policy holders. There are no taxes on these dividends unless the holder accesses the cash value.
Whole life insurance
Another type of policy with a cash value is the whole life insurance policy. These types of policies have a set premium for the length of the policy. At policy inception and in the early life of the policy rates are rather high compared to the risk of death, but over time as the risk for death increases the policy remains low and can be more affordable than other types of policies.Universal life insuranceA universal life policy combines the benefits of a term and whole life policy. The policy provides for accumulation of cash reserves, which can be borrowed against at a later time. Premium payments and coverage amounts can be varied year to year
Variable life insurance
Variable life insurance is a policy that has some similarities to an investment plan. The profits that the company makes are reinvested into stocks and bonds, and these investments affect the cash value that the policy carries. This can provide a greater cash return on your policy, but it can also offer less as the money is tied to market performance.Single premium policy
The single premium policy is a unique type of insurance. This policy has one premium up front for the amount of the life insurance coverage. This amount, while large, does have some security behind it. It allows someone to give the policy as a gift, or add it to an estate plan. There is no risk that the policy will be canceled due to non payment, and this allows security if it is bought for someone as a gift or as protection for the family for the future.
A new type of policy that has been offered recently is a survivorship policy. This is a policy that covers two separate people under one policy. After the first person dies, the remaining person receives no benefits. There is no payout until both parties covered under the policy have passed away. This type of policy might not make much sense to people, until they consider that this policy is a great thing for estate planning for children and other family members.
Now, how to decide what you need and want out of a policy? The best thing is to take a look at your goals. For example, Do you want a policy that remains unchanged, or one that can be adjusted from time to time depending on your current life situation? Do you view insurance as something that you get leave alone, or something that can help you now as well as your survivors in the future?
Talking with a reputable insurance agent can be helpful in terms of narrowing options and addressing the complex array of needs a potential plan might fill. Many times, an agent can do a profile on you and give you exactly what you need without the unnecessary and often expensive extras.
Nicole Soltau is the President and Founder of http://CreditUnionRate.comThe Leading Credit Union DirectorySearch, Find, Join.
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