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Life Insurance Basics
· 25,000 or 50,000
· 1,000,000 and up
There are two basic types
of life insurance being sold in the market place today. They are term
and permanent insurance. There are hundreds of variations of these two
basic types of life insurance policies being sold and a few thousand
insurers are selling them. You don’t need a calculator to figure out that
there are tens of thousands of names for these policies. This can lead to
confusion when comparing policy types between companies. If you can just
remember that there are only two basic types of policies being sold; then
comparing policies will be a bit easier.
The main advantages of term insurance
Ø That you can generally get lots of insurance for a little bit of money.
Most companies will also allow you
to convert your term policy into a permanent policy without proving that you are still healthy. This
is a big benefit!
Ø The insurance will expire at some point and if you continue to need insurance, you will be older and often not as healthy as when you originated the policy. This would likely mean your premiums would be significantly higher or worse, the company may not even be willing to issue a policy due to an adverse health condition that did not exist when you originated the policy.
The premiums paid
are generally lost.
Call an insurance
agent today for the many different options that are available.
Permanent Insurance – The insured pays premiums for this type of
policy in exchange for a specified initial death benefit but that
benefit may increase with time. The premiums for this type of policy are
generally not refundable but, these policies carry a cash value.
Cash value is a dollar amount of money that accumulates over time. This is an
"account" of money within the policy. There are restrictions with
accessing the cash value, especially in the early years. This type of
policy is generally more expensive than term insurance initially,
however, over time the cash value can exceed the amount of premiums paid
into the policy. There may also be an option to stop paying premiums for
the rest of your life and the policy will still continue. Many permanent
policies sold today offer the insured flexibility in the future with the
amount of insurance and the premiums paid. Death benefits can be increased
or decreased. Premiums can be increased, decreased, skipped or stopped all
together. All of this flexibility within the same policy.
Ø The policy is set up to last a lifetime, thus the name permanent.
Ø The cash value will also grow and over time and often exceed the amount or premiums paid into the policy. This may take many years.
Ø You can generally also use the cash value if you need extra money.
the permanent policies sold today are flexible.
Ø The initial premiums are usually higher than term insurance.
Ø The policies generally take many years before the cash value starts to accumulate significantly.
If the insured
cancels the policy in the early years, there may be little or no cash
value for the insured.
Every one will need some life insurance during their lifetime. Getting it while you are still young and healthy will give you the lowest possible premium payments. Call an agent today for all of your options with permanent insurance. Many agents have a life insurance specialist on staff.