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Life Insurance Policy Options
By Wesley Lynx
There is a great deal of life insurance information available online, although much of it makes assumptions as to the extent of your knowledge. You have a number of options available to you when you purchase life insurance, and which you go for depends on the purpose of your policy, and what it is to protect.
Term Life Policies
Term Life Insurance policies, for example, are designed to provide a lump cash sum in the event of your death within a specified time period: that period is specified by you, and can be over 1 year, 5 years or whatever you want. Your beneficiary will be paid the amount you have insured if you die within that period, but once it has lapsed you receive nothing.
Hence, if you have insured yourself for $100,000 for 5 years, and you die in 5 years and one day, there is no payment. After that 5 years you receive nothing back, and this is the cheapest type of life insurance. Many travelers buy this type of life insurance for the period of an airplane flight, in case of a fatal crash. The purpose of most Term Life policies is to cover the funeral expenses, and you generally require a medical examination; death due to any known conditions are not covered.
A term Life Insurance policy can be renewed once it has expired, and this can sometimes be done without any further medical examination for a higher premium price. This could be an option if you have contracted a terminal disease during the period of your soon-to-expire policy. Many older people who have been insured by their companies, and then have to insure their own lives when they retire, buy Term Policies because they are cheaper than Whole Life over an unlimited time. All life insurance companies, such as Standard Life and Lincoln National, offer Term Life Insurance since it is one of the most popular of the policies available.
Decreasing Term Life Insurance
An option to Term Life insurance as a Decreasing Term Life policy, in which the amount that you are insured for decreases but your premium remain the same. The premiums for Term Life policies increase as you move from one term to another - that is because you are older, so the probability of the insurers having to pay out increases. This is an unusual way to arrange life insurance, since as time goes by the value
of the payment reduces.
Credit Life Polices
Credit life policies are also known as Mortgage Protection insurance when used to protect mortgage repayments. As the names suggest, they are designed to ensure that a loan or mortgage is paid off when the borrower dies. They tend to be mandatory elements of many loans and mortgages, and are frequently offered by the lenders at prices generally higher than those charged by regular life insurance companies such as ING.
Whole Life Insurance Policies
A Whole Life Insurance policy is purchased for life, and the price is based upon your age when you buy the policy. Your monthly payments are higher in the early years of the policy in order to finance later cash payouts, and you can cash the policy in for a cash sum if you wish. This depends on how long you have been making payments, but never approaches the value of what you have paid in. That is because that is not the purpose of a Whole Life policy: it is intended as a life insurance policy for your whole life, the sum insured to be paid when you die. This is as opposed to a Term Life policy that is taken out for a limited time.
Universal Life Insurance Policies
This type of policy, on the other hand, is designed to be cashed in after a certain period. You make your payments monthly over a term decided by yourself. This could commonly be over 10 or 20 years, and if you die during that period your beneficiary receives the sum insured. If you do not, you get paid a sum based upon your payments and interest rates. A Universal Policy is a combination of life insurance and an investment, and is often called an Endowment Insurance.
Among the top American insurance companies offering life insurance policies of all types are American General and Lincoln National. There are many others, and you should make sure that you research what each has to offer before making a decision. Some of these companies specialize, and it is possible to meet all your life insurance needs at the best prices offered by more than one life insurance company.
Most life insurance information you receive will advise you that you need not stick to one company for all your life insurance needs, and that you can maximize your cover while minimizing your premium costs.
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