Life insurance is basically a contract between an insurer and an insurance coveree, in which the insurer promises to cover a designated insured individual a specified amount of money upon the insured person’s death. The amount the insurance cover pays may depend on many factors like age and health of the insured, the type and amount of cover, riskiness of the risk and other related terms and conditions. Terminal illness and critical illness are some of the conditions that may trigger premature death benefits.
Life insurance in the United States is usually of two types: the term and whole life policies. Term insurance provides coverage only for a stated duration. The insured pays premiums based on the term, which may be for a number of years or a specific number of years. During the term of the policy, the premium amounts increase steadily and the death benefit decreases.
A whole life insurance policy is one that is both permanent and term. The cash value part of the policy combines with the life insurance premium to provide a death benefit. While the premiums of the permanent life insurance policy remain unchanged for the lifetime of the insured, the cash value part of the permanent policy increases with the inflation rates.
The most common kind of permanent life insurance policy is the variable permanent life insurance policy. With this kind of permanent policy, the insurer and the insured agree on a cash value and the premium payment scheme. With variable permanent life insurance policy, the insurer can adjust the premium and death benefit at any given time depending on changes in the value of the investments.
The beneficiaries of permanent life insurance policies are generally the children of the insured. In some cases, the spouse may also become a beneficiary. A group of family members or individuals may become beneficiaries by virtue of being an associate in the business organization. One of the common features of whole life insurance policies is that there are usually some flexible options provided for the account holders including the possibility to add or remove beneficiaries and adjust the rates of the premium.
If you are looking to buy a term life insurance policy, you may want to compare its cost and benefits offered by different companies. The term life insurance provides coverage only for a limited period. This period may last for fifteen years or thirty years. The benefit of the term life insurance is the ability to make premium payments within the allowed time frame without affecting the face value of the policy. As compared to whole life insurance policies, term life insurance provides more coverage at less cost.