What Exactly is Life Insurance?
Life Insurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the insured’s death to the designated beneficiary or beneficiaries. In return, the policy owner agrees to pay a stipulated amount called a premium at regular intervals.
There are several different types of policies to choose from:
Term Insurance – Term life insurance is designed to provide financial protection for a specific period of time, such as 10 or 20 years. Typically, premiums are level and guaranteed for that time. After that period, policies may offer continued coverage, usually at a substantially higher premium rate. Term life insurance is generally a less costly option than permanent life insurance.
Universal Life – A flexible type of insurance for individuals and families wanting guaranteed protection for life. We offer Fixed Rate guaranteed and Equity Index Plans designed for highest maximum returns with no downside in capital. Unlike whole life insurance, universal life insurance policies are flexible and may allow you to raise or lower your premium or coverage amounts throughout your lifetime. Like whole life insurance, universal life also has a tax-deferred savings component, which may build wealth over time. Additionally, due to its lifetime coverage, universal life typically has higher premiums than term.
Whole Life Plans – These plans have been around for 100 years. You are guaranteed coverage until death and premiums remain level. Because of the lifetime coverage period, whole life usually has higher premiums than term life. Policy premiums are typically fixed, and, unlike term, whole life has a cash value, which functions as a savings component and may accumulate tax-deferred over time.
Joint Whole Life – Plans designed for business owners and married couples who want to keep premiums low without losing protection with fixed prices.
Children’s Policies – Designed either for maximum savings or maximum protection with low premiums in mind.
Endowments – Plans that are designed to leave maximum amounts of tax free money to churches, charities, universities, etc.
Buy/Sell Agreements – Designed to protect business owners if a partner dies. A set price is paid to settle the owner’s portion of the company, guaranteeing the survival of remaining owner(s).
People take out life insurance policies for a number of reasons. Such insurance provides security to family members upon the loss of a loved one. For instance, if the primary wage earner dies in his or her prime, the death benefit received from the policy will assist the surviving family members in overcoming the burden of the tragic loss. The proceeds can also help pay for funeral costs when the death is unexpected.
The cost of life insurance varies depending on such factors as the insured’s age, health, and occupation. Essentially, the more likely a person is to die at an earlier than average age, the higher that person’s premium charges will be. For example, the premium for a 25-year-old, male, non-smoker in excellent health will be far less expensive than a similar policy for a 65-year-old male smoker. Similarly, a sky dive instructor would have to pay much higher premiums than would a librarian.
Call Choice Plus Benefits today to begin planning for the rest of your life.