Understanding The Different Types Of Life Insurance

by insurance | Dec 21, 2018 | Basic Life Insurance Facts

There are may companies providing life insurance services; you can get most of the information you need from insurance brokers, financial advisers who work for insurance companies, employees of insurance companies, and other sources. Much of the information you receive, however, will be in general terms or will focus more on sales talk aimed at getting you to purchase life insurance from the person you are talking to.

The truth is that there are many different types of life insurance available not just the cradle to grave coverage offered by insurance sales people. Here are three of them.

Level Term Life Insurance

This is a type of coverage with a specific face amount (the death benefit) over a set number of years with the premium generally kept constant throughout the policy’s term. The term of insurance is fixed; it can be 1, 5, 10, 15, 20, and even 30 years.

The typical aim of this kind of insurance is providing the family some financial protection in case of the insured’s death within the term ensuring that there are enough monies to support the survivor and any dependent children. It may also be designed to cover payments for loans or mortgages, again ensuring that the beneficiary will not be burdened by the responsibility of repaying them when the insured passes away.

This is how it works. You purchase the insurance plan. This insurance will cover you effectively for the term or the number of years specified in your insurance contract. Within that term, too, you will have to pay insurance premiums regularly. If you die within that specific time period, your family or whoever your beneficiary is will receive the amount of money specified in the plan. If you don’t die within the term, you lose your premiums, unless your policy states that you get them back.

Decreasing Term Life Insurance

This is taken out specifically to provide a contingency for repaying the policyholder’s loans and mortgages just in case he passes away before he’s able to repay them. The insurance coverage is for a specific period (usually equivalent to the life of the mortgage or loan), and the level of coverage decreases during the policy’s term usually in conjunction with the amount of the loan or the mortgage (e.g., as the loan is repaid, the amount of cover is reduced to cover the balance remaining). The premium remains constant during the term of the policy.

Decreasing term insurance works pretty much the same way as level term insurance in term length and what triggers the payout. The only difference is the decreasing value of the coverage.

Whole Life Insurance

If you take out this type of insurance, your family or beneficiary will get a lump sum of money. This money can then be used to pay for your children’s educations or mere day to day expenses.

Of all three types, this is the most expensive in terms of premiums. However, this type of insurance lets you build cash value which you can loan out. You can also surrender the insurance in exchange for the total cash value of the policy. This type of insurance is therefore more flexible since it offers you more options. Moreover, you have coverage as long as you live, provided of course that you keep up your premium payments.

The above are only three of the available life insurance options available. It would be best to sit down with an authorized insurance person for advice on the best type of insurance for your particular needs.

Overview And History Of Life Insurance

by insurance | Dec 21, 2018 | Basic Life Insurance Facts

Life insurance is a subject that brings on many different opinions. While some believe it is a waste of money or even considered gambling, most people understand that life insurance is primarily used to ensure that your family or beneficiary is well taken care of upon your death. Life insurance also ensures that your family will be able to take care of your burial and funeral expenses.

While there are many different types of policies as far as life insurance is concerned, term life insurance is considered to be pure insurance because it builds no cash value like other policies. While some life insurance policies are used as a type of savings or retirement account, term policies are in place for a specific amount of time and only paid out in the event of death. Term life is the most practical and unselfish way to ensure no one has to worry about how to take care of you in the event of your death.

History of Life Insurance

As with most things ancient, Rome recorded one of the first life insurance policies in existence. Roman groups called Fratres (or burial clubs) came together to establish this form of security for their workers. These policies were set up by the poor to pay for the funerals of fellow club members and to help the surviving family financially.

The first insurance company in the United States was started in 1735. This South Carolina based company, called the Friendly Society, lasted until 1740. In 1759, the first life insurance company was established in Philadelphia by the Synod of the Presbyterian Church. It was started for the benefit of Presbyterian ministers’ families. As with the Romans, the basic financial needs of surviving family members would be taken care of.

As far as ancient times, society has known that those who are left behind need some sort of financial security upon a loved one’s death. Undoubtedly, it seems that even in ancient times, burial and funeral expenses alone were enough to wipe away a family’s savings. In the case of a family being impoverished, a proper burial might even be out of the question.

While no one likes to think of death and dying, term life insurance is something that is very much needed. The trauma of losing a loved one is obviously emotionally and mentally draining and at least a life insurance policy allows the added financial burden to be eliminated. Choosing the right policy to accommodate your needs is the key to planning a secure future for your family.

Most Practical Choice

If you are looking for a simple way to look after your family after your passing, term life insurance seems to be the most practical way to go. With even a minimal policy, you can ensure that your family will be able to pay for burial and funeral expenses. If you have children, hopefully your policy will enable them to attend college or perhaps your family’s house can be paid off.

With the advent of the Internet, it is easy to study the various types of term life insurance available online as well as the requirements that each carrier might have. You can obtain fast quotes online as well. Some term life insurance companies even offer no medical exam policies or cheap policies that are affordable. Terms usually run in 10-year periods 10, 20 or 30-year policies are the norm.