Life Insurance Policies
Good Life Insurance Coverage
Life insurance is essentially an agreement made between the insurance provider and the policyholder in which the insured provides a monthly premium payment in exchange for a death benefit for the named beneficiaries of the insured upon his or her death. Also, there is the added help for a client who is alive but terminally ill and is in need of financial assistance in the form of an early triggered death benefit payment to the beneficiaries. The death benefit is determined by the policyholder and is determined by considering his or her salary and, of course, the perceived financial requirements of the beneficiaries.
Types of coverage
There are several kinds of this type of coverage. The most basic example and the least expensive is known as “term insurance.” In this case, the policyholder simply pays his or her monthly premiums for an agreed upon term that usually comprises 10 or 20 years. If the insured were to pass away during the term, then the death benefit is paid out to the beneficiaries. However, if the insured survives beyond the term, then the policy stops being in effect. This means that the previously insured needs to enroll in a new policy for continued coverage.
Whole life is different in that the monthly premium is costlier than term insurance, but it instead covers the policyholder for his or her entire life as long as premiums are kept up. Whole life also has the added benefit of an accrued cash value component. Here the monthly premium resides in a separate cash account that can be made available as a loan or even eventually utilized to pay premiums. By the way, the cash that grows in this account is tax deferred.
Other kinds of life insurance include universal and variable life. Both provide coverage for the life of the policyholder but they also offer cash-value accounts with fixed or variable rates of interest to be drawn against as desired.
Before deciding upon a life insurance policy, it is a good idea to converse with an insurance professional to determine what type of policy is best for your situation, objectives and budget.
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