For-Life-Insurance.info

Which type of policy is best for you, term or whole life? The answer depends on several factors, including:

Your Needs. If you need coverage only until your children graduate from college, for example, you might be better off with a term life policy.

Cash-value insurance is better suited for long term needs, such as planning estate taxes and providing lifetime security for your spouse. Some term policies cannot be renewed past age 70 or 80 and can become costly to renew as you approach that age.

The Cost. If term life insurance is more suited to your budget and you want life time coverage, consider a term life policy which can be converted into a whole life policy. Then you can convert the policy whenever your cash flow or needs dictate. You can also purchase a combination of term life and whole life insurance and gradually shift into whole life insurance over time.

Your Savings and Investment Goals. Whole life insurance can be a good long term investment vehicle, especially because the cash value has the potential to grow tax-deferred. Should you no longer need the insurance but want some extra cash, you may surrender the policy and collect the accumulated cash value. Be sure to discuss the tax consequences with your tax advisor first.

As an alternative, you could purchase term life insurance and invest what you save on premiums on your own. Compare the returns you can expect, and remember to take taxes into consideration if you plan to select taxable investments.

So, Should I Buy Term Life or Whole Life Insurance? Term life and whole life insurance both have advantages including immediate family protection. Deciding which type of policy and which features are right for you takes careful consideration and, most times, a comprehensible look at your financial plan. To discuss your life insurance needs and financial requirements, contact your financial professional.

Technorati Tags: Careful Consideration, Cash Value Insurance, Deciding Which Type, Extra Cash, Immediate Family, Insurance Term Life, Investment Goals, Investment Vehicle, Life Time, Lifetime Security, Long Term Investment, Premiums, Several Factors, Tax Consequences, Taxable Investments, Term Life Insurance, Term Life Policy, Term Policies, Time Coverage, Whole Life Insurance

If the choice between term life insurance and life insurance was not so complicated, today there were not such a variety of life insurance companies and discussions about what is better. The whole our life is more than just protecting your family in the case of your death or disability. Different types of the whole life insurance are also in some case an investment vehicle that let you create cash value for the future. Some of them even pay dividends. This article will provide a quick summary of different types of the whole life insurance policies that today are available on the market.

Life insurance policies mainly could be divided into two big types – the whole life insurance and the term life insurance. In its turn a whole life insurance could be divided into participating whole life insurance and non-participating whole life insurance. According to these categories the following sub-categories of the whole life insurance could be outlined:

Limited payment whole life insurance

In plain words, with the traditional whole life insurance, you have to pay premiums throughout the period of time you need the policy to be in force. Limited payment whole life insurance policy is a protection for your life with the limited quantity of payments. According to this type of life insurance you will not be paying insurance throughout the whole lifetime, but the premiums will be substantially higher. It could be a great choice for those people, who have no opportunity to pay premiums regularly. It could be set a limited period of time during which you have to pay premiums.

Level insurance premium whole life

Usually life insurance premiums increase as you are getting older and the risk of your death increasing. Premium under life insurance is set for a lifetime of the policy. According to the level insurance premium whole life in early years you have to pay higher premiums in comparison with the traditional whole life insurance and the excess premium including interest on the excess makes for the past several years when you are not enough to pay annual cost of your life insurance company. Also premiums are an extra investments made by the insurer, to add cash value to your life insurance policy.

Undetermined premium whole life insurance

Undetermined premium whole life insurance policy is also called adjustable premium policy. This type of whole life insurance requires premium payment throughout the life or as long as you want it to be in force.

All single premium life insurance

According to this type of whole life insurance you pay for your life insurance policy on a single share due to the issue of the policy. A single premium whole life insurance policy has immediate cash and loan value and usually considered as an investment tool.

The choice of life insurance brokers is an important one, because there are lots of life insurance brokers in this industry, but can all of them take proper care of your situation? Read more about finding and choosing life insurance brokers here.

Technorati Tags: Disability, Dividends, Insurance, Insurance Life, Insurance Premium, Investment Vehicle, Life Insurance, Life Insurance Brokers, Life Insurance Companies, Life Insurance Policies, Life Insurance Policy, Life Insurance Premiums, Lifetime, Limited Quantity, Period Of Time, Protecting Your Family, Risk, Term Insurance, Term Life Insurance, Variety, Whole Life Insurance, Whole Life Insurance Policies

Term life insurance provides the coverage a specific period of time called “term”. For instance, the term life insurance is designed to protect the mortgage or provide the income to your family in the case of your untimely death. You will pay the premiums on the monthly basis and as long as you will pay these premiums you life insurance policy will remain in force. Once your term life insurance policy reaches the end of the term (it could be 5, 10, 20 or 30 years) you have to renew your term life insurance policy at a higher price. If you die within the term of the life insurance policy, than your beneficiaries would receive a lump sum of money from your life insurance company.

In contrast, the permanent or whole life insurance remains in force till your death. You pay the premiums for a specific period of time (usually between 10 and 20 years) on a monthly basis. A part of your monthly payment goes to cover the insurance and the life insurance company that provides the insurance investments to the remainder. Generally you do not have to pay any premiums; your dependants will receive huge sum of money after your death.

Permanent life insurance policies have been criticized because they have very low investment returns. Thus there are a lot of advices to but life insurance protection with the term life insurance policy and invest the difference between term life insurance payments and the permanent life insurance ones into the separate investment vehicle such as stocks, mutual funds, or bonds. Usually people purchase the life insurance policy when they need stability and security in the event of their untimely death.

However there is a new, more flexible product on the market of life insurance – universal life insurance policy. While the life insurance companies control the savings in the permanent life insurance, the savings in the universal life insurance policy are controlled by the policy holder. Life insurance companies offer a lot of different investment options for this saving component, even including mutual funds. In this way you have the ability to meet your life insurance needs and to increase your returns on investment.

Among all advantages of the universal life insurance policy there is the most important one – it is a tax-advantaged growth. When you are paying the police premiums, the part of your payments cover the insurance and the part is invested. However, when you decide to withdraw the money from your investment, you basis is higher with the universal life insurance policy. The cost base of the universal life insurance policy is equal to the sum of all your premiums – the money you have invested plus the money to have used to buy the life insurance policy.

The choice of life insurance brokers is an important one, because there are many life insurance brokers in this industry, but can all of them take proper care of your situation? Read more about finding and choosing life insurance brokers here.

Technorati Tags: Advices, Dependants, Flexible Product, Insurance Investments, Insurance Payments, Insurance Term Life, Investment Returns, Investment Vehicle, Life Insurance, Life Insurance Brokers, Life Insurance Companies, Life Insurance Company, Life Insurance Policies, Life Insurance Policy, Life Insurance Protection, Permanent Life Insurance, Sum Of Money, Term Life Insurance, Term Life Insurance Policy, Universal Life Insurance, Untimely Death, Whole Life Insurance

Term insurance provides coverage for a pre-specified period. For example, term insurance is designed to protect a mortgage or provide income for your family in case of your death. You pay the term insurance premium each month and as long as you pay the premium your policy will stay in force. Once the contract reaches maturity (usually in 10 years) you need to renew your policy at a higher price. If you die while you’re paying the premium your estate gets a large sum of money.

In contrast, permanent or whole life insurance remains in force until you die. You pay the premium on a monthly basis for a pre-specified term, which can range between 10 to 20 years. A portion of your monthly payment pays the insurance and the life insurance company that provided the insurance invests the remainder. Eventually you don’t pay any premiums but your estate still receives a large payment upon death.

Whole life polices have been criticized because their investment returns are low. Thus you were often advised to buy life insurance protection with a term policy and invest the difference between term and whole life payments in a separate investment vehicle, such as mutual funds, stocks, or bonds. Once you have built up a large pool of assets you don’t need the insurance because the assets will provide security and stability in the event of an unexpected death.

However, there is a new, more flexible product called universal life insurance. While the life insurance company controls the savings in a whole life policy, the savings in a universal life plan are owned and controlled by the policyholder. Insurance companies offer a large variety of investment options for this savings component, including mutual funds. Thus, you have the ability to meet your life insurance needs and increase your return on investment.

The major advantage of a universal life policy is tax-advantaged growth. When you pay the policy premium, a portion of the premium pays for the insurance and a portion is invested. However, when you are ready to withdraw the money from your investment, your cost basis ( the portion not subject to tax) is higher with a universal life policy. The cost base for a universal policy is equal to the sum of all your premiums – the amount of money you have invested plus the money you have used to buy life insurance. This is very useful because increasing your cost base will ensure you pay less tax once you sell your investments within the universal life policy.

Universal life insurance provides a powerful combination of life insurance and tax-advantaged investment opportunities. Investors should realize that universal life insurance premiums work twice as hard as other premiums. They should also know that choosing the right product is an important element in the overall success of this strategy. Finally, the benefits of this strategy are magnified if you are in a higher tax bracket.

Technorati Tags: Flexible Product, Insurance Companies, Insurance Premium, Investment Options, Investment Returns, Investment Vehicle, Life Insurance Company, Life Insurance Protection, Maturity, Mutual Funds, Polices, Policyholder, Premiums, Return On Investment, Sum Of Money, Term Insurance, Unexpected Death, Universal Life Insurance, Universal Life Policy, Whole Life Insurance

Knowing what kind of life insurance to get can be scary and threatening to the average person. Understanding the basic kinds of insurance products available out there can reduce some of that anxiety. How can you tell whether you should go with term life insurance or whole life insurance?

Term life insurance generally has the lower monthly premiums of the two. You can get higher coverage for a lower monthly payment. This kind of insurance is valid only for a certain period or term, hence the name. You purchase term life insurance to cover you until the kids grow up or until retirement or for another specified time range. If you don’t make any claims against the policy, you won’t receive any benefits from this type of insurance during the life of the policy. Other types of insurance are like that, examples include home insurance and auto insurance.

Whole life insurance on the other hand is viewed as a type of investment. A portion of the money you pay each month is invested into an interest bearing account or investment vehicle thereby increasing in value over the life of the individual who purchases this type of insurance. If you were to cancel a whole life insurance policy, the insurance company would return to you the value of the investment that has accrued since you began the policy minus any fees. Given enough time, the interest on this kind of policy can even grow large enough to cover the monthly premium that is due thereby potentially giving you insurance without a monthly cost.

How can you tell which type of life insurance is right for you? Know some of the basic advantages of each before deciding. Term life insurance generally results in lower monthly premiums with higher overall coverage. With the money you save on this type of life insurance versus whole life insurance, most people can still invest in other things like mutual funds, real estate or the stock market and get as good or better rate of return than the investment in a whole life policy. Many people will buy whole life insurance for specific tax or estate planning purposes.

While knowing these differences helps, I would suggest you find yourself an insurance agent you feel comfortable with and discuss which insurance plan is right for you. There is no substitute for a good adviser when navigating potentially complicated and difficult waters like life insurance.

Technorati Tags: Anxiety, Auto Insurance, Average Person, Bearing, Home Insurance, Insurance, Insurance Company, Insurance Products, Insurance Term Life, Investment Vehicle, Life Insurance Policy, Mutual Funds, Premiums, Rate Of Return, Retirement, Stock Market, Term Insurance, Term Life Insurance, Time Range, Types Of Insurance, Whole Life Insurance

Life insurance can be categorized as either “whole life insurance” or “term life insurance”. Essentially, the difference is that whole life insurance is designed to provide coverage for the duration of policyholder’s life while term life insurance provides life for a specified period of the policyholder’s life.

In addition to providing coverage for a lifetime (or until the policyholder reaches 100), whole life insurance also builds up cash value over time. Coverage remains in effect for the policyholder as long as premiums continue to be paid.

Certain benefits are available to whole life insurance policyholders including fixed premiums over the life of the policyholder versus increasing premiums resulting from term life insurance policies. In addition, whole life insurance carries a guaranteed cash value. However, policyholders must maintain current premiums for both whole life and term life insurance to obtain the respective benefits.

Given the steady, predictable payments and payout, whole life is an excellent option for most people thinking about the long term future. Besides being more or less permanent, it also enables you to build up cash value free of taxation. If you decide you don’t like your policy after all, there’s no worries. You can cancel it at any time, and get the the value of insurance in cash.

Whole life insurance policies can be a good investment vehicle. Supporters even argue the cash value should compete with other fixed income investments. A policyholder can end up with a higher cash value than the guaranteed amount (variable policies do not carry guaranteed cash values) if the market performs well or the interest credit rating of the insurer strengthens. Policyholder’s also have the right to borrow against the cash value of the whole life insurance policy enhancing one’s credit profile.

The last attractive basic feature of whole life insurance one should consider, arguably the most valuable, is the opportunity to earn dividends. The dividends are set based on the overall return on its investments for the insurance company. While universal life insurance is often adjusted monthly, interest on whole life policy is adjusted annually.

You should not purchase whole life insurance if you cannot afford it or if there is a good chance that you may not be able to afford it in the future. It’s best, however, to purchase life insurance while you are still young. If term life insurance is all that you are able to afford, that’s better than no policy at all. The higher premiums found on whole life insurance are because they do cover you for the whole of your life; making it worth the higher costs if you are able to afford it. But whatever policy you choose, be sure that you can indeed afford it. Whole-life premiums will never change, and while this is good if you can afford it in the first place, if you cannot it can be very bad. Get life insurance, but get what you can afford. Any coverage is better than none at all.

Technorati Tags: Cash Values, Credit Profile, Credit Rating, Dividends, Duration, Fixed Income Investments, Insurance, Insurance Life, Insurer, Interest Credit, Investment Vehicle, Life Insurance, Life Insurance Policies, Life Insurance Policy, Life Insurance Policyholders, life insurance tips, No Worries, Policyholder, Premiums, selling life insurance tips, Term Life Insurance, term life insurance tips, Time Coverage, Whole Life Insurance, Whole Life Insurance Policies