What Is Permanent Life Insurance?
Life insurance is simply a contract between an insurer and an insurance holder. The insurer promises to cover a designated beneficiary at an agreed amount of cash upon the death of that insured individual. Depending on the contract, sometimes critical or other events like terminal illness can also cause payment into a life insurance policy. A person may purchase life insurance for one’s home or the financial security of a loved one. One type of life insurance policy is called “Term Life,” which covers burial expenses. An example would be the policy taken out by a mortgagee, which pays the cost of burials and possible home repairs.
There are many different types of life insurance policies available. These include “Whole Life,” “Definitive,” and “Limited Liability.” The “Whole Life” plan has no set limit on how much cash you can collect, while the “Definitive” and “Limited Liability” only limit the number of years during which your beneficiaries will receive payment from the policy. If one passed away, the life insurance policies of the other named beneficiaries would continue to pay the mortgage, debts, and other financial obligations of these individuals, in most cases.
Another type of life insurance policy, called “Term Life,” lasts for a pre-specified period, generally from one to thirty years. The term life policy is usually taken out by mortgage lenders or life insurance agents who foresee the possibility of the policyholder passing away during the initial term. The term life policy is desirable to mortgage lenders because the premium for the policy does not increase over time.
Some insurance companies offer a” LONG-TERM” or an “ARTIFUL” rider to their life insurance policies, which are essentially additional benefits that can be added onto the original policy once the policy has been purchased. Most long-term riders consist of a “cash surrender value,” which is equal to the current fair market value of the policyholder’s estate, and a long-term health insurance benefit, which pays benefits to the named beneficiaries when the policyholder becomes ill during the policy’s life. The cost of adding a rider to an existing policy is dependent upon the insurance company, but the amount paid back to the policyholder during the policy’s life will remain constant.
One type of permanent life insurance policies is the “UNITED” policy, also known as a “self-directed” policy. Unlike term life insurance policies, a universal policy allows the policyholder to select a universal life insurance premium, which is determined by a combination of factors such as age, gender, health, and whether the policyholder has a bank account. The policyholder has the ability to decide how much money they would like to receive during their lifetime, and the policy’s interest rate is subject to a set index. If the policyholder should die during the specified lifetime, the premiums would be returned to their cash balance.
Variable universal life insurance policies allow the policy owner to choose between various investment options, such as stock funds and bond funds. The owner may also choose between investing for growth only, and putting money into an investment account that earns a higher interest rate. Although this policy is more expensive than the more conventional whole life insurance policies, it gives the policyholder flexibility. If a policyholder passes away, the beneficiaries will be able to take care of themselves, should they not have their own funds; however, if the insured were to leave the family without enough money to provide for themselves, the policyholder would be permitted to take control of the account and invest it.
Another option that you may want to consider is called the “death benefit.” A death benefit is the last interest paid on your policy by the insurance company after your death. Death benefits are different from other life insurance policies in that they do not need to be repaid. As long as the premiums on your whole life policy were repaid when you passed away, the death benefit is the last payment made to your beneficiaries. Although this feature is not available with variable universal life policies, it can be a wise choice for some people.
There are many variables you should study before choosing the most appropriate permanent life insurance or term life insurance that will meet your needs. In addition to the above mentioned factors, it is important to find out about the experience of the company you are thinking of buying the policy from. You should also consider how long they have been in business. Find out how much they will charge for the coverage you want, and find out whether there are any other types of policies they offer. Lastly, make sure to ask your financial advisor or your family doctor about the pros and cons of any particular policy type you are considering.