Term Life Insurance
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The Benefits Of Insurance
The purpose of insurance is to prepare for and manage risk in a given event in the form of a premium paid by the person planning against the risk by the agent prepared to cover the risk of the event of it happening. To have a form of financial compensation should the risk; an illness or accident for instance happen, is the basis by which the whole world has now accepted and needs insurance. A premium is usually paid every month by the insured party to the person accepting the risk which is calculated by working out the actual likelihood of this event happening, often within a set period of time.
Not all insurance is dead money as there are other types where an investment is made by the insurer with the insured’s premium and a payment, usually with profits is made at the end of the term with a percentage retained by the insurer. The insurance industry is huge and now caters for just about every eventuality leading to a rise in competition, specialist companies and to lower premiums generally.
Of course there are occasions where a person will be required to carry insurance or else the event or activity will be cancelled as the risk is too great. life insurance, health insurance, property insurance, travel insurance, pet insurance, cycle insurance too name a few.
Although most types of insurance are for general, everyday needs, some other insurance policies can be arranged to cover either dangerous or unusual situations like mountain climbing or parachuting for instance. This means that almost anything you can think of can be insured although whether you actually do insure it may depend on the cost!
Insurance policies are plans that are provided by an insurer to the insured. This document will usually include the schedule as well and is a legal contract between the two parties that states that should the insured situation occur then an amount equal to the amount insured will be paid out by the insurer as compensation.
Before this, a quote is generally issued illustrating what the policy will and will not cover; this must also include how much will be paid out and what the premium is going to be.
If the situation or event for which the insurance was issued, happens then the insurance company will review the submitted claim and check its validity before agreeing to pay the sum insured to the recipient. Whereas in the early days insurance could only be purchased directly from the insurance company, today there are other options including brokers who can source many different companies to get the most competitive quote available.
The main factors to be considered while purchasing insurance policies are; does the policy cover all the risks and what are the limits, plus are there any hidden costs and will the company pay for the claims without any problem. Another, very fast method of arranging insurance nowadays is via the internet and there are a large number of comparison sites available to make the task simple.
Life Insurance Policies–protecting Your Future Today
By: John Dale..
Negotiating the life insurance jungle can be a nightmare. It doesn’t have to be and though there may be a raft of new ideas and terms to come to grips with, you need to remember you have to get this decision right for your loved ones as by the time you claim, you will be gone and cannot come back to correct any mistakes.
Term life and whole of life insurance policies are the two most common insurance policies on the market. Less well known are variable universal life insurance policies.
Whole of life policies actually combine a life insurance with an investment fund that is built up over time and is held for the benefit of the policy holder. The level of cover and premiums are reviewed at regular intervals and if, in later years, the level of cover cannot be maintained by the premiums being charged then the investment fund can be used to supplement the cost of cover and maintain protection until death.
Whole life insurance policy is one of the long term policies and is the longest lived contract that can ever be made by policy holders. This insurance policy is very flexible and is used for the protection estate from inheritance taxes which are levied on death.
The second common type of life insurance policies i.e. Term life insurance policies are for a period of time. The investment policy is not involved and in addition, the premiums are less expensive. The premium is used to buy the life coverage and when the time for this policy ends there is no tax-return policy.
Typically, term life insurance policies are used to insure mortgages which last a known length of time so the term can easily be calculated. They also are often used for young families who have a desperate need for financial protection but are subjected to very tight budgetary constraints.
Whole life insurance is more like a variable universal life insurance as variable life insurance contains investment element with life insurance. These policies are very flexible in receiving premium from there policy holders and it depends on there holders what they want to pay.
Variable universal life insurance policies are as much a part of an investment portfolio as your insurance coverage. Being insurance policies they benefit from attractive taxation benefits that are peculiar to insurance policies. Being flexible as to how and when they receive premiums, this allows for their use to shelter capital gains that otherwise are taxable within them.
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Do Life Insurance Companies Steal Your Money?
By: Jim Russo
When it seems as though life insurance companies are getting richer and richer it seems logical to question whether you should be adding to their profits. You are not the only one asking this question.
Now naturally, defending any large corporation is a difficult task. Since it is a difficult and complex question to answer it probably makes more sense for the average family to simply decide if it works well for them.
Is probably worth while, however, for us to participate as consumers in the life insurance picture. In its simplest form life insurance is simply a case of spreading risk across a large group of people so you and I might benefit. Of course, in its role as an administrator the life insurance Company probably makes an out better than anyone else but the product or service that they all for is an extremely important one.
The best perspective for us as consumers is to focus less on how much profit the insurance companies are making and look instead at how we can profit from the situation. There is no doubt that in many, many cases individuals do profit enormously.
True, some one does have to die early in order to win but for someone who has a responsible and mature love for another person buying a proper life insurance policy is a brilliant and compassionate decision. The reality is that there are many, many cases where individuals have only paid in to a life insurance policy a matter of a few thousand dollars spread over many years which in the end has benefited the beneficiaries to the tune of hundreds of thousands of dollars and some times $1 million and more.
Yes, it is more frequently true now that both parties in a marriage, for instance, do have full time jobs but that hardly means that the surviving partner will not have a very difficult time financially in the event of death. Most families in America now are multi-income families and very much dependent on that second or third source of income. Especially in today’s mortgage market with many people having very high monthly mortgage payments it is very important to be financially secure.
As with any purchase when we are dealing with individuals we frequently come out ahead as opposed to dealing directly with a cold and impersonal corporation. In an age when the average consumer is much more sophisticated about their purchases the overwhelming majority of people seek out local independent agents for all of their Insurance purchases. Simply remember that while most agents are only motivated to find you the cheapest price because of their desire to earn a decent living it are still wise for you to compare the offerings of two or more agents against the authors.
So, are insurance companies stealing from us? Probably your point of view determines the best way to answer this important question. There is no doubt that the majority of insurance companies do make exorbitant profits year to year but that does not make it an unwise purchase for you. The financial bottom line frequently is simply that for a few hundred dollars of premium per year many people do buy hundreds of thousands of dollars in insurance protection for their family.
Life Insurance – Do Not Neglect It!
By: Andrew Chan
There is one important component of personal financial planning that you should look into – life insurance. Many people do not cater for this, but it really should be looked upon as a necessity. Ignore it at your own peril, for it could be financially disastrous for you.
This is a necessary investment, no matter what your situation is. This will give you peace of mind to carry out your other daily activities. Here are some information to help you in your search.
A “term life” plan is one of the most popular, since it is usually the most inexpensive way to obtain life coverage. It does not build cash value and no refund is given if the policy is canceled. It can be renewed annually or for a more common term of 5, 10, 15, 20, or 30 years. If the insured passes away, the benefit is paid to the beneficiaries.
A whole life policy is quite a popular option as well. It lasts until for the lifetime of the insured or chooses to cash out. There are various options available for this form of insurance and can be quite confusing to the lay person. People who want more flexibility with their policy will find this useful. There are several categories of whole life insurance. In this respect, it may be useful to consult a financial planner.
For the single or those without any dependents, their life insurance needs may not be that demanding. In any case, it is still a good idea to have some coverage to help cover final expenses such as funeral and burial costs.
One who has a family to support will of course need much more coverage than one who is single. Take into consideration what the funds will be needed for. Look out for debts that you will want to be cleared off in the event of your death. If children are involved, costs that will be incurred for college or school should be taken into account. Consider any immediate needs that will need to be taken care of and how long the money should last.
If you are the main caregiver of small children, it is wise to have life insurance even if you are not earning any money. Thought should be given to how much it would cost to engage help to look after the children if you were no longer around. There should also be enough funds to cater for that person’s final expenses. Not having enough life insurance for “non-revenue generating” family members is a common mistake, and should be avoided.
There have been mixed reviews regarding buying a life policy for a child. To some people, it may be a good idea to cover final expenses in case the unthinkable happens. These policies are quite affordable, and in this regard, some parents like to have that assurance. The probability that a child will die is actually quite low, however. Thus another school of thought is to put that money towards a savings or investment for college. Whatever the case is, the decision still lies with the parents.
Life insurance can be a depressing subject to discuss for many people. But like it or not, it is still a practical and necessary detail that has be taken care of. Once you take care of this detail, you gain a peace of mind knowing that you have done the best you could for yourself and family in the event of any unforeseen tragedy.
Check out more great information and tools whilst you are on the subject of life insurance. Jump over to our site at simple-financial-planning.com for more.