Life Insurance Basics

Life Insurance

There are many types of life insurance policies. Before you venture out for one, learn about them and see which one is applicable to your needs best. The following are the most common ones:

1.    Term life insurance: This type of insurance is the most basic of all. Its one and only function is to cover your life with an amount of cash which on even of your death will be given to your nominee. Here the death benefit is equal to the policy limit. This is a good way to have mental peace in the conviction that you will provide for your family even in the event of death. This is good thing to have as a stand by any day.

2.    Whole life insurance: This type of policy besides providing a fixed amount to your nominee on your death, it also gives you a financial gain over time as an investment would. The benefits you get out of this type of insurance is:

a.    pays a fixed policy amount in event of death
b.    gives you an investment amount that is free of tax
c.    protects you from rising prices the premium is fixed for the life despite market fluctuations
d.    pays dividends as any good investment plan
e.    offers you freedom to sell the policy back at any given time you choose

3.    Variable life insurance: This type of insurance is much more flexible than the whole life insurance.  The best benefit here is the fact that it allows the policy owner to borrow against the policy maturity amount. In this way not only you are insured but you also have a very decent source of borrowing at a lower rate than the market price interest rates. The variable life insurance too offers the benefit of tax-free ash accumulation that is a great incentive for investing in insurance the world over. There is another benefit that accrues from this type of insurance, i.e. the amount that is to be paid as a benefit to the nominee of the policyholder can be varied according to the need of the beneficiary (in relation to the funds available in the account).

4.    Universal life insurance: This insurance one of the most flexible of all types of insurances. It not only covers the death, but also allows you a host of other benefits:

a.    As all insurance policies, it pays the beneficiary a prearranged amount of cash in the event of your death
b.    It provides a tax-free cash investment which can accrue interest at market value
c.    It allows complete flexibility on the premium making it easy for you to keep up with your payments even in lean times
d.    At the same time this type of insurance allows amount flexibility

5.    Universal variable life insurance: This is the ultimate among all the insurance policies. It allows you complete freedom on the way you invest and recover your investment. You have full control upon your cash at all times:

a.    it pays the beneficiary a prearranged amount of cash in the event of your death
b.    It provides a tax-free cash investment which can accrue interest at market value
c.    It give you total premium flexibility
d.    It allows to withdraw cash from your policy at any given time throughout your life time
e.    It allows you to borrow against the maturity amount at subsidized rates of interest
f.    It allows you to terminate the policy at any time, however, in that event your maturity amount will be reduced according to the time in question

The first and foremost role of life insurance is to protect the near and dear ones in the event of one’s death by providing an alternative source of income. Today, however, there are a number of benefits added to the main role. Check out the latest developments and choose well. Get value for your money.

Author: Robert Lawrence

Robert co-founded http://Insurance4USA.com, an insurance quote shopping service, in 1999. He has been a licensed insurance agent in New York State since 1990.

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