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Saturday, November 21, 2009
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Life Insurance
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Call us at (800) 940-3002
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Life insurance is a contract binding a
life insurance carrier to compensate a beneficiary for the death of a person
insured. If the individual who was insured dies, then the company will provide a
payment to the individual’s beneficiary. Life insurance is used to protect the economic
value of a human life with regards to those who may be financially dependent upon
it.
There are many types of life insurance, but it is important to carefully evaluate
your individual needs—and the needs of your family—prior to selecting any
life insurance policy. Here is a brief overview of some of the most common
life insurance types:
- Term life insurance –life insurance
protection for a specified period of time. A death benefit is paid to the beneficiary
if the insured dies within a specified period of time while the policy is still
in force. Additionally, many term life plans can be converted to permanent life
insurance without evidence of insurability. Finally, term life insurance is typically
cheaper—on a monthly payment basis—then permanent life insurance.
- Whole life insurance – permanent
life insurance and protection for life. As long as premiums are paid, a death benefit
is paid to the beneficiary. The premiums for whole life insurance policies are designed
to remain level over time. In addition, these policies accumulate cash values on
a tax-deferred basis.
- Universal life insurance
– permanent life insurance. Like whole life insurance, as long as premiums are paid,
a death benefit is paid to the beneficiary. These policies are different from whole
life insurance policies because they offer the policy owner some flexibility to
change the premium payments and death benefit. The death benefit may be increased
subject to insurability or decreased, and the premiums can also be increased and
decreased as well as skipped.
- Variable life insurance
– permanent life insurance and provides protection for life. Like whole and universal
life insurance, a death benefit is paid to the beneficiary as long as premiums are
paid. The premiums for variable life insurance policies are designed to remain level
over time. In addition, these policies accumulate cash values on a tax-deferred
basis with the potential for higher rates of return than traditional whole life
policies.
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