Life insurance is basically a contract involving an insurer or an agent and an insurance holder, in which the insurer agrees to cover a designated beneficiary at an agreed amount of money upon the insured person’s death. Depending on the contract, the death of the insured person can also cause payment to beneficiaries. Life insurance can be used to provide financial protection for family members after the insured has passed. The insured person may also use it to provide for the family’s needs in case of his/her disability or death.
Usually, people opt for a permanent life insurance policy because it provides more benefits and less restrictions compared to term insurance policies. A permanent policy gives more benefits than a term policy with all its various restrictions. In most cases, these policies also offer more flexibility and choices to the policyholder. In fact, a permanent policy may even provide for the possibility of additional survivors.
There are four types of life insurance policies that an individual can purchase. These include Term Life, Whole Life, Variable Life and Universal Life. Each type has different features and limitations. It is important to know which policy type is right for you and your family. You should first determine what your priorities are. Factors such as medical exam requirements, age and health are factors to consider in choosing a policy type.
Some of the most common kinds of permanent life insurance are: The most popular one is the universal life insurance where there are fixed payments made to beneficiaries; another is the variable universal life (VUL) where flexibility is given to the beneficiary; the third is the safety net that allows the beneficiary to collect payments even if they lose income. Another policy type that may be purchased is the group life insurance where individuals can pool funds to receive money from two to five times the amount of their contribution. However, before purchasing any kind of policy it is important to know how much your family will be able to afford. You should always consider the safety net and how it will work in case of your death.
Although Term Life Insurance is very flexible, there is no guarantee as to the increase in your coverage. The premiums remain the same throughout your life, but the value of the policy is based on the current or accumulated value at the time of your death. Whole Life Insurance also gives you an opportunity to create a safety net. This coverage also gives you the benefit of having an income replacement that is dependable. There are many years’ worth of benefits to choose from. You should look into various Whole Life Insurance quotes to know which will best suit your needs.
Variable Life Insurance gives you more options as to how much coverage amount will be provided. With this kind of policy, the premium and death benefit remains constant for as long as you have your mortgage or other loan secured by property. There are certain restrictions on how the cash value of variable policies can be invested. Some insurance companies provide guaranteed returns based on a percentage of your investment value. Choosing a good insurance coverage amount is a very important part of securing your future.