Life Insurance
Life Insurance is a contract between an insurance company and an insured individual that guarantees a specific sum of money to a designated beneficiary upon the death of the insured or to the insured if he or she lives beyond a certain age.
The main purpose of life insurance is to provide a measure of financial security for your family or your business after you die. Life insurance can also be a used as a supplemental investment vehicle for retirement or college funding. So, before purchasing a life insurance policy, you should consider your financial situation and the main goal you wish to acheive with your policy. Other consideratious include the standard of living you want to maintain for your dependents or survivors. For example, who will be responsible for your funeral costs and final medical bills? Would your family have to relocate? Will there be adequate funds for future or ongoing expenses such as daycare, mortgage payments and college?
It is a great idea to re-evaluate your life insurance policies annually or when you experience a major life event like marriage, divorce, the birth or adoption of a child, or purchase of a major item such as a house or business.
Types of Life Insurance Coverage...
- Term Insurance
This type of policy provides life insurance coverage for a specified term of years in exchange for a specified premium. The policy does not accumulate cash value. Term coverage is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else. However, recently a new type of term policy was introduced known as Return of Premium term, which allows the insured to recover all of the paid premiums if they survive the term of the contract.
There are three main factors to consider with Term insurance:
- Face Amount (protection or death benefit),
- Premium Amount (cost to the insured), and
- Length of coverage (term)
Various insurance companies sell term insurance with many different combinations of these three parameters. The face amount can remain constant or decline. The term can be for one, five, thirty, or more years. The premium can remain level or increase. Common types of term insurance include Level, Return of Premium, and Mortgage insurance.
- Permanent Insurance
Unlike term life insurance, permanent insurance does not expire. It is designed to last for the entire life of the insured and combines a death benefit with a savings vehicle. This savings portion can build cash value - against which the policy owner can choose to borrow funds, or in some instances, the owner can withdraw the cash value to help meet future goals, such as paying for a child's college education or funding a retirement. The two main types of permanent life insurance are whole and universal life insurance policies.
Whole Life- provides a level premium, and a cash value table included in the policy guaranteed by the company. The primary advantages of whole life are guaranteed death benefits, guaranteed cash values, fixed and known annual premiums, and mortality and expense charges will not reduce the cash value shown in the policy. The primary disadvantage of whole life is that the premium is not flexible; in most cases if you do not pay the specified cost, the policy will lapse.
Universal Life- is a relatively new insurance product intended to provide permanent insurance coverage with greater flexibility in premium payment and the potential for a higher internal rate of return. There are several types of universal life insurance policies which include "traditional” fixed universal life insurance"), variable universal life insurance, and equity indexed universal life insurance.
At Health Insurance Depot you can...
- Meet face to face with an advisor who can help you make sense of all the available options.
- Get competitive quotes from several trustworthy Life insurance companies.
- Take comfort in the fact that we work for you and not the insurance companies.
