Choosing A Life Insurance Policy
Life Insurance is essentially a contract between an insurer and an insurance agent or issuer, whereby the insurer pledges to pay out a designated beneficiary an amount of cash upon the insured individual’s death. In return, the insured has to make regular premium payments to the insurer. The insurance industry is an ever changing market with countless deals and policies being introduced every day. There are many types of life insurance available in the market. They include term life insurance, variable life insurance, universal life insurance, whole life insurance and even endowment life insurance.
Permanent life insurance policy type is considered one of the most popular ones. In this type, a beneficiary can be an individual, trust fund or group. Beneficiaries can also include companies, communities, schools, hospitals, investment funds, etc.
Most people prefer whole life insurance because it gives them enough money to their beneficiaries upon their death. The face value of the policy is the entire death benefit, which can be renewed annually or within a specified time span. This policy type features flexible premiums that allow you to choose the amount of premium you would like to pay based on your financial status at the time of renewal. You can also borrow against the face value of the policy but this depends on the insurance provider’s rules. Unlike variable life insurance policies, permanent life insurance policies are not affected by the ups and downs of the stock market and bond markets.
Variable universal life insurance and whole life insurance are both permanent. With these policies, you are able to choose the premium payments you want to make monthly. If you want to borrow against the policy, you will only be allowed a certain amount based on the value of your premium payment. In addition, you will not be given the opportunity to borrow against the amount you have paid up in case you die before the maturity of the policy.
In order for you to be able to benefit from the policy, you must know how much money your beneficiaries should receive upon your death. These dependents must wait until the predetermined age in order for the death benefits to be released. If there are no specific requirements, the policy may provide the death benefit to whomever the insurance provider thinks is most likely to inherit the estate. Although there is generally less choice involved in choosing beneficiaries in a whole life policy than there is with variable universal life policies, the one significant difference between these two insurance products is that you cannot borrow against the face value of the policy, even if you wish to do so.
It is important to remember that regardless of the type of life insurance policy you choose, the beneficiary is not considered an additional person in the eyes of the law. They are only entitled to the amounts specified in the will or as stated in the premium payments listed in the agreement. Furthermore, you must be at least fifty years old in order to be able to borrow against the policy’s face value. In addition, the beneficiary may be restricted to the family, friends, or relatives who are listed in the policy as the beneficiaries. Finally, you must pay the entire premium payment on or before the designated maturity date in order to access the death benefit. You must avoid paying more than the total premium or borrowing more than you can afford.