Life Insurance || Life Insurance Quote || Term in Life Insurance || Term Life Insurance Quotes



Life Insurance || Life Insurance Quote || Term in Life Insurance || Term Life Insurance Quotes


What Is Life Insurance?

Life insurance is a contract between an insurer and a policyholder.

A life insurance policy guarantees the insurer pays a sum of money to named beneficiaries when the insured policyholder dies,

in exchange for the premiums paid by the policyholder during their lifetime.


KEY TAKEAWAYS

Life insurance is a legally binding contract.

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.


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 policy’s 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.


How Life Insurance Works

A life insurance policy can has two main components—a death benefit and a premium.

Term life insurance has these two components, but permanent or whole life insurance policies also have a cash value component


Death Benefit—The death benefit or face value is the amount of money the insurance company guarantees to the beneficiaries identified in the policy when the insured dies.

The insured might be a parent, and the beneficiaries might be their children, for example.

The insured will choose the desired death benefit amount based on the beneficiaries’ estimated future needs.

The insurance company will determine whether there is an insurable interest and if the proposed insured qualifies for the coverage based on the company’s underwriting requirements related to age,

health, and any hazardous activities in which the proposed insured participates.


Premium—

Premiums are the money the policyholder pays for insurance. The insurer must pay the death benefit when the insured dies if the policyholder pays the premiums as required,

and premiums are determined in part by how likely it is that the insurer will have to pay the policy’s death benefit based on the insured’s life expectancy.

Factors that influence life expectancy include the insured’s age, gender, medical history, occupational hazards, and high-risk hobbies.

2 Part of the premium also goes toward the insurance company’s operating expenses. Premiums are higher on policies with larger death benefits,

individuals who are higher risk, and permanent policies that accumulate cash value.


Cash Value

—The cash value of permanent life insurance serves two purposes. It is a savings account that the policyholder can use during the life of the insured;

the cash accumulates on a tax-deferred basis. Some policies may have restrictions on withdrawals depending on how the money is to be used.

For example, the policyholder might take out a loan against the policy’s cash value and have to pay interest on the loan principal.

The policyholder can also use the cash value to pay premiums or purchase additional insurance. The cash value is a living benefit that remains with the insurance company when the insured dies.

Any outstanding loans against the cash value will reduce the policy’s death


Types of Life Insurance

Many different types of life insurance are available to meet all sorts of needs and preferences.


Term Life—

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.

Level Term—

The premiums are the same every year.

Increasing Term—

The premiums are lower when you’re younger and increase as you get older. This is also called “yearly renewable term.”

Permanent—

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

Single Premium—In this case the policyholder pays the entire premium up front instead of making monthly, quarterly, or annual payments.

Whole Life—

Whole life insurance is a type of permanent life insurance that accumulates cash value.

Universal Life—

A type of permanent life insurance with a cash value component that earns interest, universal life insurance has premiums that are comparable to term life insurance.

Unlike term and whole life, the premiums and death benefit can be adjusted over time.

Guaranteed Universal—This is a type of universal life insurance that does not build cash value and typically has lower premiums than whole life.

For More Information watch the video full

Post a Comment (0)
Previous Post Next Post