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LIFE INSURANCE COVERAGE
Is carrying a life insurance policy important? We think it is; not just because we sell them. Most of us have someone who is dependent on us and feel we should not burden with our debts and paying for our own funeral arrangements. As well, a life insurance policy can serve many other various purposes.
You might think carrying life insurance is costs too much; but, many when are choosing a policy is not thinking in terms of the realistic amount of coverage they are in need of. Unfortunately, life insurance agents who think solely of their commissions do not educate their clients and help them realize their true purchasing power.
Types of Life Insurance
It is imperative that overall differences among the types of life insurance are well understood and the exclusions well.
Term Life Insurance
This is the least expensive plan because it provides a no-nonsense type of coverage. This policy is very straight forward. The amount you purchase is what your beneficiaries will receive. If you buy a $50,000 policy your beneficiary will receive just that. The policy has no cash value. Your premium payments will be based on the term of coverage; for example, a 10 year term policy.
Further, if you purchase a 10 year term policy and you do not die within those ten years, your beneficiaries will not have a death benefit payed out them; but you do have the option of purchasing another term life plan policy.
Whole Life Insurance
This plan costs more than term life insurance but the good news is, it provides lifelong protection. Once you purchase it you have it for life and your beneficiaries will inherit a death benefit payout. The premium rate of this plan option is typically fixed-meaning you will pay the same amount for the entire existence of the policy.
The plan does usually accumulate cash value. The cash value can be paid out in dividends or applied to your account as a payment against your premium. You can cancel this policy at any time; even though, it is intended for you to hold till your time of death. You can also borrow against the policy.
Variable Life Insurance
This option is like whole life insurance except, the cash value build has some flexibility. This type of policy is good for those who can tolerate risks because the returns on the cash value portion of the policy can alter the death benefit payout. Your beneficiaries can either inherit a final payout that is higher than the coverage taken or it can be lower. You can also borrow against the policy.
Universal Life Insurance
This option is similar to whole life insurance but has enhanced flexibility. It adds cash value to your policy and allows you to borrow against it. The cash value portion does earn market rates which provides low risk but offer you the potential to earn a higher return on it.
Universal Variable Life Insurance
This type of policy is also good for those who can tolerate risks. It allows you to invest the cash value portion of the policy in various funds; such as, stock and bonds and the money market. You can borrow against the policy and cancel at any time.
What it provides
•Medical assistance if you were to required extended care as a result of a chronic illness or disability whether you reside in a long term care facility or in your own home.
•Personal care and community services. This is very useful if you were to become incapacitated, require emotional