Put simply, life insurance is a contract between a consumer and an insurance company. The most common term of the contract is that the insurance company will pay the insured's named beneciaries the "face amount" of the policy upon the death of the policyholder. Some insurance policies accumulate cash over time permanent policies and some do not term policies. There are several categories of life insurance products, but most consumers will generally choose between a whole and term life or term assurance policy.
1. What is a term life policy?
Term life is a policy that a consumer may continue to purchase for a fixed, defined period. Generally the period is lengthy. 10-, 20-, and 30-year terms are typical. A term assurance policy has no cash value and an insured receives nothing in addition to the coverage during each year for which he or she pays.
When consumers purchase term assurance, they should be certain that it is guaranteed renewable. This clause ensures that a consumer is entitled by the policy agreement to purchase the coverage for the agreed number of years. Policyholders should also be certain that the term policy is guaranteed to be renewable for a stated premium. Guaranteed renewable insurance is worthless unless the premium is guaranteed. Often the agreed premium changes after a certain number of years, and this may occur more than once.
Term assurance is sensible when consumers have a sound plan for retirement, but particular needs would arise if the consumer, as a primary breadwinner, were to die. Generally, needs like this have to do with children or spouses, but that is not always the case.
2. What is a whole life policy?
Whole life policies are a growing financial asset that a consumer owns and will have someday paid off. When a consumer purchases whole life coverage, a number of benefits are received that are not included with a term assurance policy.
First, once the agreed amount of time when premiums must be paid has passed, the policy remains in force. All permanent policies also carry what is known as a cash value. A cash value is an amount that policyholders can receive by surrendering their policy in the future. The cash value accumulates as more and more premium payments are made over the years.
3. How can policies be compared?
Consumers may contact insurers directly for quotes. It's more efficient to go to their site online and use their insurance comparison services. Consumers should not assume that buying extra coverage through an employer is the best deal, especially since the insurance will likely be lost if they ever switch employment.
1. What is a term life policy?
Term life is a policy that a consumer may continue to purchase for a fixed, defined period. Generally the period is lengthy. 10-, 20-, and 30-year terms are typical. A term assurance policy has no cash value and an insured receives nothing in addition to the coverage during each year for which he or she pays.
When consumers purchase term assurance, they should be certain that it is guaranteed renewable. This clause ensures that a consumer is entitled by the policy agreement to purchase the coverage for the agreed number of years. Policyholders should also be certain that the term policy is guaranteed to be renewable for a stated premium. Guaranteed renewable insurance is worthless unless the premium is guaranteed. Often the agreed premium changes after a certain number of years, and this may occur more than once.
Term assurance is sensible when consumers have a sound plan for retirement, but particular needs would arise if the consumer, as a primary breadwinner, were to die. Generally, needs like this have to do with children or spouses, but that is not always the case.
2. What is a whole life policy?
Whole life policies are a growing financial asset that a consumer owns and will have someday paid off. When a consumer purchases whole life coverage, a number of benefits are received that are not included with a term assurance policy.
First, once the agreed amount of time when premiums must be paid has passed, the policy remains in force. All permanent policies also carry what is known as a cash value. A cash value is an amount that policyholders can receive by surrendering their policy in the future. The cash value accumulates as more and more premium payments are made over the years.
3. How can policies be compared?
Consumers may contact insurers directly for quotes. It's more efficient to go to their site online and use their insurance comparison services. Consumers should not assume that buying extra coverage through an employer is the best deal, especially since the insurance will likely be lost if they ever switch employment.