Life insurance is basically a contract between an insurer and an insured individual, in which the insurer promises to pay out a designated beneficiary an amount of money upon the demise of an insured individual. Depending on the contract, such events as critical illness or terminal illness may also trigger additional payments. The contract may specify a limited life insurance, term life insurance or some combination thereof. It is vital that you seek the advice of an experienced insurance agent or broker before choosing what type of life insurance to purchase and what coverage to include.
Term Insurance Insurance
Term insurance provides protection only for a fixed premium paid by the named beneficiary(ies). Upon the policyholder’s death, the applicable death benefit is paid directly to the beneficiaries specified in the policy. If the insured has no dependent children, then the funds automatically pass to any dependents that are named in the policy. A whole life policy provides coverage for a fixed premium payment that may increase over time. The amount of the increase is based on a number of factors, including the age of the insured at the time of purchase, the risk-free interest rate being used in calculating the policy’s premiums, and the amount of coverage provided by the insurance carrier under the terms of the insurance contract.
For some individuals, the benefits of term life insurance to provide adequate coverage when they need it most. However, for others, especially those who have young dependents or household members who rely heavily on their income, a whole life insurance policy may be the better choice. These individuals may not need to have regular monthly premium payments, because they rarely pass away in the event of a medical emergency. They may also benefit from the flexibility provided by whole life insurance policies, which allows them to purchase additional types of coverage at additional cost. If an additional premium is needed, it can easily be added at a later date.
Whole Life Insurance
Whole life insurance companies are typically regulated by national associations. As a result, rates can vary greatly between companies. The rates that you will receive will be affected by factors such as the company’s risk level and the nature of its investments. Some factors, such as life insurance claims, are tied to the success rate of the company’s underwriters. This is why it is important to do some comparison shopping among life insurance companies before choosing one to purchase coverage.
There are a few additional aspects to consider if you are interested in purchasing life insurance that will affect your premiums and death benefits. Some policies offer options for allowing your beneficiaries to use your money to cover their own expenses. However, this benefit may not be available through every life insurance company. The same is true of variable universal life (VUL) plans, which allow you to choose an investment portfolio that will grow along with your account balance. You can make adjustments to the investments, which may increase your premiums or decrease the death benefit over time.
Getting the Right Life Insurance Quote
It is best to get as many quotes as possible before making your final decision on permanent life insurance policy. You should compare different prices to see which company offers the best deal on a permanent life policy with your desired beneficiaries. Be sure to ask any questions that you may have while comparing the policies. It is also a good idea to talk to an agent that can answer any questions that you have about permanent policies.