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Life insurance policies allow benefits to be paid directly to beneficiaries to relieve the burden of significant expenses and allow for future financial stability. Life insurance policies are for those that still live after someone has died. If you have a family and help to support them financially, obtaining life insurance is a good plan to have.

Term life insurance policies can vary by 50 percent for the same coverage. That?s why it?s best to compare quotes at InsWeb to find both the rates and policy that is right for your personal situation. Term life insurance provides financial protection over a set “term” or period. Getting some term life insurance quotes might be the right step especially if you want coverage over a long period. Term life policies have no cash value of their own. They don’t accrue interest and you can’t borrow money against them.

Term life policies are generally tax-free and may even allow for a partial payout upon diagnosis of a terminal disease. Term life will cover you if you die in a plane crash, and health insurance should cover medical expenses. Term insurance provides protection for a defined period of time?from one to 10, 20, or even 30 years?and pays benefits only if you die during that period. Term insurance is often used to cover financial obligations that will disappear over time, such as tuition or mortgage payments.

Term life insurance is pure, unadulterated life insurance. It is called various things by various companies: “whole life”, “universal life”, and so on. Term life does not build up ” cash value “. Cash value policies are designed to be held for life , and hence often cost significantly more than term policies. Term insurance covers you and pays your designated beneficiary in the event of your death or certain other catastrophic events. It is not an investment policy; it has no cash value.

Cash value insurance is much more expensive than term (particularly at younger ages), but typically provides insurance throughout lifetime at a level premium. A policyholder normally can receive the benefit of these cash values during lifetime in one of two ways: (1) by taking a loan against them, or (2) by cashing in the policy (the policy will no longer be in force, but the policyholder will receive the cash surrender value). Cash values are predetermined and will not vary over the life of the policy based the insurance company’s experience. Whole life is often referred to as ordinary life or straight life. Cash values are accumulated by crediting premium payments and interest to a fund from which deductions are made for expenses and cost of insurance. Interest rates are linked to an external index such as Treasury bills.

Universal life insurance allows consumers flexibility in when premiums are to be paid and the amount that they would be. Universal life policies also allowed consumers to permanently withdraw cash from the policy without the interest associated with the loan provisions in whole life policies. University development offices and other prospective nonprofit beneficiaries are well aware of this, and many encourage gifts of policies. What they and prospective donors might be less sure of—and consequently need your help in deciding—is how to properly value donated life insurance interests for tax purposes. Universal life insurance policies also accumulate cash values on a tax-deferred basis.

Universal life insurance is also called adjustable life insurance. Remember that, with permanent life insurance, some of your premium is invested.

Premium rates for these smaller coverage amounts tend to be higher per unit than those of larger coverage amounts (a unit equals $1,000 of coverage). Therefore, consumers interested in smaller policies should also review quotes for policies at the $100,000 coverage amount. Premiums on Term Life policies often increase regularly as the insured ages. Premiums can vary widely between companies for the same policy and spending an hour or two shopping around could save you thousands of pounds. Shaving just ?10 a month off a twenty-five year policy would leave you with an extra ?3,000 in your pocket.

Premiums ranging from $0.05 to $0.65 were collected on a weekly basis, often by agents coming door-to-door, instead of on an annual, semi-annual, or quarterly basis by direct remittance to the company. Additionally, medical examinations were often not required and policies could be written to cover all members of the family instead of just the main breadwinner.

Tags: cash value insurance, life insurance policies, premiums, term life insurance, universal life insurance

This entry was posted on Thursday, July 17th, 2008 at 7:21 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.