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Life insurance policies differ from other types of insurance in that a human life is being insured as opposed to an item, such as a house, which has a repair or replacement value.
A house can survive indefinitely without damage. A person will, at some point, succumb to death.
When a company writes a policy to insure a car or a home, they hope that they will never have to pay a claim. When a company writes a life insurance policy, they know that they will eventually pay a death benefit, as long as the person continues to pay their premiums.
Whole life insurance is a kind of “permanent” as opposed to “term” coverage option. With a term life policy, the insurer and the insured agree on a specific premium rate for a specific number of years or term.
The insured usually has the option to renew the policy at the end of the term, but the rates will be higher as he or she advances in age.
Whole life insurance has no term. Annual premiums are fixed. They will not change throughout the life of an individual. There are guaranteed cash values and death benefits. The cash value can be borrowed against and payback is optional. If not paid back, the loan amount simply reduces the death benefit.
Whole life premiums are higher initially than those paid for term life policies. But, because the premiums do not change as the years go by, the cost of either type is relatively the same.
The perceived disadvantages of whole life policies are addressed by a newer product called “universal life coverage”. When one considers insurance as a kind of investment, savings plan or endowment for one’s beneficiaries, the rate of return becomes a point of consideration. The rate of return on universal policies is higher, meaning that the premiums paid are a lower percentage of the cash value.
Policies can be written for any amount or face value. To determine the amount of coverage that you need, there are several things to consider. Companies provide forms and online calculators to help you determine how much your beneficiaries would need to survive, in the event of your untimely death.
Life insurance of any kind provides peace of mind for you and your family members. The Internet makes it easy to compare premiums of all kinds online so that you can determine what you can afford and how much you need.
To see how little you could be paying today just use the form below for free.
