When purchasing life insurance coverage, there are several factors that it is important to keep in mind. For example, the proper amount of coverage is essential in ensuring that loved ones and survivors will be able to pay off final expenses, estate taxes, or other debts that they are in need of the life insurance proceeds for.
Just as important as the right amount of life insurance coverage is having the right type of insurance protection. This is because there are many different kinds of life insurance to choose from - and each may work a little differently, as well as provide various different features for the policyholder.
There are a variety of different life insurance coverages to choose from in the marketplace today. But overall, there are two primary forms. These are the term and permanent. With term life insurance, an only pure death benefit is provided. There is no cash value or investment component that is included with this type of coverage - and because of that, term life insurance is typically the most economical form of life insurance that there is. This is especially the case for those who are young and in good health at the time of application.
While term life insurance can be inexpensive, this type of coverage also comes with an expiration date. These policies are sold for certain time frames or terms. For instance, a term life insurance policy may be 5 years, 10 years, 15 years, 20 years, or 30 years - after which, the policy will expire and if the insured wishes to remain covered, he or she will need to re-apply for coverage at their then-current age and health condition. There are also term life plans that are annually renewable. With this type of coverage, the policy must be renewed each year - and usually the amount of the premium will rise at each renewal date.
Permanent life insurance differs from term in that it provides both death benefit protection, along with a cash value component. The cash value is allowed to grow and compound free of taxation - at least until the time it is withdrawn. This can allow the cash to increase on an exponential basis.
The policyholder can withdraw or borrow funds from the policy's cash value for any reason that he or she chooses, such as for paying off a debt, supplementing their retirement income sources, and / or going on vacation.
The cash doesn't even have to be repaid. However, if there is an unpaid balance in the policy's cash value component at the time of the insured's death, then this amount will be subtracted from the amount of the death benefit that is paid out to the beneficiary at that time.
There are many different types of permanent life insurance policies. The most basic of all of these is whole life insurance. These plans, as their name implies, are intended to remain in force throughout the remainder, or the "whole," of the insured's lifetime - or until the policy pays out. This usually occurs when the insured reaches the age of 100.
There are several reasons why a whole life insurance policy may be attractive to a policyholder. One reason is that the premium on these plans will typically remain constant for the entire life of the plan. And, although this is usually higher at the onset of the policy than a corresponding term life insurance policy, as the insured gets older, the premium continues to stay the same - even if the insured's health deteriorates, and he or she becomes uninsurable.
There are numerous different types and variations of whole life insurance that are available today in the market. These can include what are referred to as either par and non-par policies. A par, or participating, policy is one that shares in the excess profits of the life insurance company. This is typically done by providing the policyholder with dividends. These dividends are usually not taxed because they are considered to be a return of a portion of the premium. Therefore, this can provide yet another tax advantage for the whole life insurance policyholder.
Non-par, or non-participating, life insurance policies do not receive dividends. With these types of policies, the insurer assumes all risk of future performance, meaning that if the cost of future claims is underestimated by the insurance company, then the insurer will need to make up for the difference. However, if the cost of the future claims have been overestimated, then the insurer can keep the difference.
There can be numerous benefits to owning a whole life insurance policy. These can include the fact that the premium remains locked in throughout the entire life of the policy. This can be a real advantage - especially for those who are on a budget and may have difficulty with rising prices.
These policies will also offer a minimum death benefit. Since those who have a whole life insurance policy will never need to re-qualify for their coverage (provided that they keep their coverage in force by paying the premium), then they can always count on having a set amount of death benefit available to their beneficiary.
Another nice advantage is the steady amount of cash value that can be built up over time - with a gain that is tax deferred. Even if the policyholder does opt to surrender or cancel the policy, he or she will be able to obtain the cash that has been building up in the policy over time.
Just as there are different types of permanent life insurance policies, there are further differences in whole life insurance plans. These are often broken down by the way in which these policies have their premiums paid.
Just some of the ways in which a whole life insurance policy's premium may be paid include the following:
When seeking premium quotes for whole life insurance coverage, typically the best way to obtain the most competitive price is to work with either an agency or a company that has access to more than just one insurer. This way, you will be able to compare directly multiple policies and premium quotes and in turn determine which will work the best for you and your coverage needs.
If you are currently in the market for a whole life insurance policy, we can help. We work with many of the best life insurance carriers in the marketplace today, and we can assist you in obtaining the important details that you will need in making a well-informed purchase decision. When you are ready to move forward, just simply <Click Here Now>.
Should you have any additional questions regarding whole life insurance - or about any life insurance at all - please feel free to contact us directly. We can be reached via telephone, toll-free, by calling 877-235-9299. Our experts will help you to ensure that you are making the best coverage decision for your specific life insurance protection requirements. So, contact us today - we're here to help.