Oct 01
adminLife Insurance Death Benefit, Death Benefits, Debate, Different Companies, Exact Coverage, Insurance, Insurance Life, Insurer, Life, Money, Period Of Time, Periods, Permanent Insurance, Premiums, Rest Of Your Life, Temporary Insurance, Term, Term Coverage, Term Insurance, Term Life Insurance, Term Policies, Whole Life Insurance
Comparing Term Vs Life Insurance is comparing temporary coverage to permanent coverage. Term life insurance is only temporary and Whole life insurance carries with you the rest of your life. So what other differences are there between the two in this common debate?
Whole life insurance builds cash value and Term life insurance does not. The cash value of a Whole life policy begins building in the third policy year and continues to grow with interest for as long as the policy is in force. You have the option to surrender the policy to the insurer and receive the cash value of the policy to do with as you please. You can also leave the policy in force and use the cash value to secure a loan.
Term coverage is only designed to be temporary coverage to provide a death benefit should you die during the period of time that the policy is in force.
Typically, term policies are sold as and “ART”, or “Annual Renewable Term” policy. Other common periods are 3, 5, 10, 20 and 30 year term policies. When the policy renews, the premiums increase based upon attained age. The main benefit of a term policy is that you can get more insurance for less money.
Some people opt for a small Whole life policy to provide permanent protection, while simultaneously using a Term policy to provide additional death benefits for a specified period of time.
Different companies charge different premiums for the same exact coverage. One insurer may charge only .00 per month for a ,000,000.00 term policy, while another charges 0.00 per month. Only by comparing policies and companies carefully will you know you’re getting the best quote.
Jul 05
adminLife Insurance Beneficiary, Cash Value Insurance, Death Benefit, Insurance, Insurance Company, Insurance Costs, Insurance Coverage, Insurance Life, Level Premium, Level Premiums, Life, Life Insurance Policy, Maturity Date, Mortality, Ordinary Life, Payment Period, Permanent Insurance, Straight Life, Traditional, Traditional Life Insurance, Whole, Whole Life Insurance
Traditional whole life insurance, also known as ordinary life or straight life, is a type of permanent (cash value) insurance that provides coverage for your entire life. This kind of policy is sometimes described as plain vanilla insurance. You pay a fixed amount, known as a level premium, each payment period (monthly, quarterly, semiannually, or annually), and a guaranteed death benefit goes to your beneficiary when you die. Your premium amount is guaranteed to remain level for as long as you live, even if the insurance company’s costs rise. When you reach old age, your premium will not increase over the amount you paid when you started the policy.
How a traditional life insurance policy works
The insurance company calculates level premiums sufficient to pay the cost of your insurance coverage (mortality costs) to the end of your life.
In the policy’s early years, the level premiums are higher than the mortality costs. The difference between the mortality costs and the level premiums is placed into a cash reserve account known as the cash value. In later years, as mortality costs rise due to your advancing age, your level premiums are lower than the mortality costs, and your policy draws on the cash value to help pay the insurance costs. As the cash value accumulates over the years, the amount of your actual insurance coverage is reduced by an equal amount.
For example, say you buy a 0,000 policy at age 30. Since you have no cash value in the beginning, you are paying for 0,000 of insurance coverage. If you have ,000 of cash value by age 40, you’ll then be paying for ,000 of coverage. Your cash value will continue to rise, and the amount of insurance coverage will continue to fall.
If you continue to keep up your premium payments, your cash value will eventually grow to an amount equal to your policy’s death benefit.
In fact, if you happen to live to the policy’s maturity date (generally age 95 or 100), the company will pay the accumulated cash value (by then equal to the death benefit) to you. But if you die at any time before you reach the maturity date, your beneficiary receives the full, guaranteed death benefit, no matter what the amount of your cash value at the time of your death.
Accessing your money in the policy
Your cash value can be used as collateral to obtain policy loans from the insurance company at interest rates stated in the policy contract. This rate is often fixed, typically about 8 percent, or it may vary according to an index. These loans are tax free and will not affect the growth of your cash value. But remember, the cash value is designed to support your policy’s death benefit. If you are unable to repay the loan, the proceeds paid to your beneficiary after your death will be reduced by the amount of the loan, plus outstanding interest. The other way to access the cash value of your traditional whole life insurance policy is through a complete or partial surrender (cancellation) of your policy. However, surrender will terminate all or part of your coverage and may have tax consequences.
Policy dividends
For policyowners, an additional benefit contained in some life insurance policies is dividends. In order for a policy to pay dividends, it must be a participating policy. Nonparticipating policies pay no dividends. Dividends are not guaranteed, but are paid at the discretion of the insurance company’s board of directors, depending on a company’s expenses, the performance of its investments, and the amount of death benefit payouts made in a year. The amount you receive is determined by a formula that takes into account the policy series, the size of your policy, your age, and the number of years the policy has been in force.
Policy dividends are free from income tax because they’re considered a return of premiums you have paid and can be taken in cash, used to pay some or all of the policy premium, reinvested to gain (taxable) interest, or used to buy paid-up insurance additions to the policy (for which no further premiums are required). You may surrender accumulated paid-up additions in later policy years and use the proceeds to pay the regular policy premiums.
Other uses of cash value
If the time comes when you feel you are unable to continue making premium payments or you feel you have more insurance coverage than you need, but you don’t want to surrender or take a loan against the policy, you have a number of alternatives. Based on the size of your cash value account, you could use your cash value to purchase what is known as reduced paid-up insurance, whereby your coverage amount is lowered and no further premiums are required. Or, you could turn the cash value into extended term insurance, which would provide the same level of death benefit you now have, but for a limited period of time.
May 03
adminLife Insurance Caries, Cash Values, Death Benefit, Different Ways, Dow Jones, Dow Jones Industrial, Dow Jones Industrial Average, equity, Fixed Rate, Important Things, Indexed, Insurance, Life, Life Insurance Policies, Life Insurance Policy, Money Markets, Permanent Life Insurance, Premiums, Rate Of Return, Rest Of Your Life, Stocks Bonds, Traditional Life Insurance, Variable Rate, Whole Life
Whole (or permanent) life insurance policies are more than meet the eye. Sure they offer a death benefit that caries through the rest of your life as long as you pay your premium and keep the policy in force, but more than that they offer an additional benefit of premiums accruing into something called cash values. These cash values can grow in a few different ways:
1. They can grow at a fixed rate like in a traditional whole life policy.
2. They can grow at a variable rate by choosing a sub account to invest them in. Sub accounts in a variable policy may have fixed investments like money markets, they may have stocks, bonds or mutual funds.
3. They can grow at a variable rate tracking the returns of a specific index-like the S&P 500 or the Dow Jones Industrial Average.
The third kind of growth is seen in an equity indexed life insurance policy. When you have an equity indexed life insurance policy, your cash values grow as they would in a variable policy but the sub account you choose is created to mimic the performance of a particular index. If that index goes up, then your cash value will likely go up. But if the index goes down, then so will your cash value.
One of the most important things to remember about an equity indexed life insurance policy is that there is no guarantee that you will earn money. Many illustrations for life insurance will show the great amounts of cash that can be accumulated in an equity indexed life insurance policy, but there is always the chance that the index you choose for your sub account will go down in value and will reduce the cash values you accumulate. The great things about equity indexed life insurance policies, however, is that they often have a floor, or minimum amount that you are guaranteed to gain. While this threshold is often significantly less than the fixed rate of return in a traditional life insurance policy, it at least offers some sort of gain while markets are down. On the other hand, there is also often a ceiling or maximum gain you can experience which may be less than the actual increases experienced by the index that you choose.
Apr 27
adminLife Insurance Cheap Term Life Insurance, Death Benefit, Food Meal, Free Health Insurance, Health Insurance Coverage, Health Savings Accounts, Home Zip Code, Insurance, Insurance Term Life, Life, Life Insurance Company, Life Insurance Coverage, Life Insurance Policy, Multiple Life, Permanent Life Insurance, Price Term Life Insurance, Quotes, Smart Shoppers, Term, Term Life Insurance, Time Periods, Universal Life Insurance, Variable Life Insurance, Whole Life Insurance
Term life insurance can be a great way to get a large amount of life insurance coverage for a very affordable price. Term life insurance is not a permanent life insurance policy like whole life insurance, universal life insurance and variable life insurance. Term life insurance offers a death benefit for time periods of 5 years all the way through to 30 years.
There are a few great reasons to consider term life insurance as a way to protect those you love:
1. Length of time – the need for life insurance begins the moment that someone depends on you financially. If they would be put in a bind were you not around and able to provide for them then you need some type of life insurance – almost without exception. Many times that starts with marriage. Sometimes this need is greatest in the beginning stages of starting a family and slowly decreases over time as kids graduate from college and start families of their own and also as adequate savings are put away to take care of a spouse should the unfortunate happen.
Term life insurance works perfectly in a situation like this.
2. Convenience – term life insurance is very easy to find quotes for, very easy to understand, and very easy to apply for. Term life insurance is very popular simply for this very reason. Term life insurance is just a very easy product all the way around.
3. Affordability – term life insurance is very cheap compared to permanent type policies like whole life and universal life. A healthy or even semi healthy individual can find dirt cheap term life insurance coverage for less than the cost of a fast food meal a day. Smart shoppers will search multiple life insurance company’s rates side by side online.
Search for health insurance the easy way by taking 30 seconds to input your health information and then viewing free health insurance quotes from the top 5 companies that offer health insurance coverage in your home zip code. Also learn aboutHealth Savings Accounts and Arizona Health Insurance.
Make sure that you use the price transparency of the Internet to find the most affordable and comprehensive health plan quotes in your home zip code!
Mar 12
adminLife Insurance Addictions, Adequate Life Insurance, Buying Life Insurance, Death Benefit, Demise, Dependents, Financial Situation, Gender Health, Greatest Challenge, Insurance, Insurance Experts, Insurance Investment, Insurance Life, Insurance Website, Invest, Investment, Investment Options, Investment Plan, Leisure Activities, Life, Life Insurance Rates, Risk Free Investment, Spending Habits, Turmoil
Nothing in life can give one the security of knowing that their family is catered for in their absence like life insurance. Life insurance investment is a risk free investment that every person who cares about their family should consider buying. The benefits are guaranteed and unlike other investment options, there is no risk of loss involved. The much that you put in is the much that your dependents will get when you die.
The greatest challenge when buying life insurance investment is determining how much insurance is really enough. Most people think they have adequate life insurance only for the family to be left in debts after their demise because the death benefit was so little it could not meet all the funeral costs, let alone cater for the family’s regular expenses.
To keep your family from going through turmoil after your death, it is important that you buy adequate life insurance.
With a sound life insurance in place, you can help preserve the lifestyle your family is accustomed to living. You can easily incorporate life insurance in your existing investment plan, no matter what your financial status is. Provided you have a regular income, this is very easy. Insurance experts say that an equivalent of ten times one’s annual income is enough to support the family for a number of years after the policy holder’s death.
This means anyone can afford life insurance especially because it is based on one’s level of income.
To find out how much life insurance investment you should buy, visit an insurance website where you will fill out a form that seeks to get a definition of your financial situation. You will be required to input information about your income level, spending habits, regular expenses, projections for future expenses and value of any assets and investments you may have. Factors such as age, gender, health, addictions and participation in risky hobbies/leisure activities will affect the life insurance rates you get.
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