What Is Life Insurance?

Life=insurance=is==contract=between=an=insurer=and=a=policy=owner.=A=life=insurance=policy=guarantees=the=insurer=pays=a=sum=of
money=to=named=beneficiaries=when=the=insured=dies=in=exchange=for=the=premiums=paid=by=the=policyholder=during=their=lifetime.

For=the=contract=to=be=enforceable,=the=life=insurance=application=must=accurately=disclose=the=insured’s=past=and=current=health
conditions=and=high=risk=activities.

KEY=TAKEAWAYS

 

Life=insurance=is=a=legally=binding=contract=that=pays=a=death=benefit=to=the=policy=owner=when=the=insured=dies.
For=a=life=insurance=policy=to=remain=in=force,=the=policyholder=must=pay=a=single=premium=up=front=or=pay=regular=premiums=over=time.
When =-the=insured=dies,=the=policys=named=beneficiaries=will=receive=the=policy’s=face=value,=or=death benefit.
Term=life=insurance=policies=expire=after=a=certain=number=of=years.=Permanent=life=insurance=policies=remain=active=until=the=insured=dies,
stops=paying=premiums,=or=surrenders=the=policy.
A=life=insurance=policy=is=only=as=good=as=the=financial=strength=of=the=company=that=issues=it.=State=guaranty=funds=may=pay=claims=if
the=issuer=can’t.

Types=of=Life=Insurance
Many=different=types=of=life=insurance=are=available=to=meet=all=sorts=of=needs=and=preferences.=Depending=on=the=short-=or=long-term=needs=of
the=person=to=be=insured,=the=major=choice=of=whether=to=select=temporary=or=permanent=life=insurance=is=important=to=consider.

Term=life=insurance
Term=life=insurance=lasts=a=certain=number=of=years,=then=ends.=You=choose=the=term=when=you=take=out=the=policy.=Common=terms=are=10,=20,=or
30=years.=The=best=term=life=insurance=policies=balance=affordability=with=long-term=financial=strength.

Decreasing=Term=Life=Insurance—decreasing=term=is=renewable=term=life=insurance=with=coverage=decreasing=over=the=life=of=the=policy=at=a
predetermined=rate.
Convertible=Term=Life=Insurance=convertible=term=life=insurance=allows=policyholders=to=convert=a=term=policy=to=permanen=insurance.
Renewable=Term=Life=Insurance—is=a=yearl=enewable=term=life=policy=that=provides=a=quote=for=the=year=the=policy=is=purchased.
Premiums=increase=annually=and=is=usually=the=least=expensive=term=insurance=in=the=beginning.

Permanent=life=insurance
Permanent=life=insurance=stays=in=forc=for=the=insured’s=entire=life=unless=the=policyholder=stops=paying=the=premiums=or=surrenders=the=policy.=It’s=typically=more=expensive=than term.

Whole=Life—

whole=life=insurance=is=a=type=of=permanent=life=insurance=that=accumulates=cash=value.=Cash=value=life=insurance=allows=the=policyholder=to=use=the=cash=value=for=many=purposes,=such=as=a=source=of=loans=or=cash=or=to=pay=policy=premiums.
Universal=Life—a=type=of=permanent=life=insurance=witha=cash=value=component=that=earns=interest,=universal=life=features=flexible=premiums.=Unlike=term=and=whole=life,=the=premiums=can=be=adjusted=over=time=and=can=be=designed=with=a=level=death=benefit=or=an=increasing=death=benefit.
Indexed=Universal—this=is=a=type=of=universal=life=insurance=that=lets=the=policyholder=earn=a=fixed=or=equity-indexed=rate=of=return=on=the=cash=value=component.
Variable=Universal—with=variable=universal=life=insurance,=the=policyholder=is=allowed=to=invest=the=policy’s=cash=value=in=an=available=separate=account.=It=also=has=flexible=premiums=and=ca0n=be=designed=with=a=level=death=benefit=or=an=increasing=death=benefit.

Ho=00=Much=Life=Insurance=to=Buy
Many=factors=can=affect=the=cost=of=life=insurance=premiums.=Certain=things=may=be=beyond=your=control,=but=other=criteria=can=be=managed=to=potentially=bring=down=the=cost=before=applying.

After=being=approved=for=an=insurance=policy,=if=your=health=has=improved=and=you’ve=made=positive=lifestyle=changes,=you=can=request=to=be=considered=for=change=in=risk=class.=Even=if=it=is=found=that=you’re=poorer=health than at the initial underwriting, your premiums will not go up. If you’re found to be in better health then you can expect your premiums to decrease.

STEP=1=-=Determine=How=Much=You=Need
Think=about=what=expenses=would=need=to=be=covered=in=the=event=of=your=death.=Things=like=mortgage,=college=tuition,=and=other=debts,=not=to=mention=funeral=expenses.=Plus,=income=replacement=is=a=major=factor=if=your spouse or loved ones need cash flow and are not able to provide it on their own.

There=are=helpful=tools=online=to=calculate=the=lump=sum=that=can=satisfy=any=potential=expenses=that=would=need=to=be=covered.

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