Life Insurance Introduction Guide
Written by Kevin Pierce on June 21st, 2009
Life Insurance is priced based on your goals, health and family history. It is a financial protection that all adults should have. Life insurance is basically just another form of financial protection, however it is one that will benefit the people you leave behind. Life Insurance is a guaranteed contract between you and an insurance company, where the company agrees to pay a pre-determined amount of money to your beneficiaries upon the occurrence of events such as death or terminal illness.
If you were to pass away, would you be 100% sure your family and loved one’s financial security would be preserved. A small amount of life insurance will protect your family from having to cover funeral expenses and your outstanding bills from their own pocket should something happen to you. Everyone has different life insurance needs, in general, an individual has the greatest need from the time they start their careers, business or a family until they reach retirement when an individuals requirement for life insurance diminish. When you buy Life Insurance, you provide a measure of financial security to your family and loved ones so that upon death they will be able to meet financial responsibilities previously covered by your income. Term Life Insurance most common and cheapest coverage because it pays only a death benefit, and has no cash value. Term Life Insurance policies can help meet a wide variety of personal and business needs and often provide the most coverage for your premium dollar spent for set periods of time. Term insurance is sold for a specified number of years. Protection expires at the end of the term and there is no cash value remaining. Term life insurance is available for set periods such as 10, 15, 25 or 30 years. Term insurance is often used to pay for financial obligations that will disappear over time, such as tuition or mortgage payments. Term life insurance is different from whole life insurance, universal life insurance and variable life insurance in that it allows you coverage for a specific period of time and pays a specific cash benefit upon death.
Term Life Insurance most least expensive coverage because it only pays a death benefit and does not have a cash value. Term Life Insurance policies can help meet a wide variety of business and personal needs and often provide the most coverage for your premium spent for set periods of time. Term insurance is issued for a set number of years. Protection expires at the end of the term and there is no cash value remaining. Term life insurance is available for set terms such as 10, 15, 25 or 30 years. Term insurance is often used to cover financial responsibilities that end after a certain period of time, such as college tuition or mortgage payments. Term life insurance differs from whole life insurance, universal life insurance and variable life insurance because it provides a coverage for a specific period of time and compensates a specific dollar benefit upon death.
Premiums paid by the policy holder are normally not deductible for federal and state income tax purposes. Premium rates for life insurance , in general are based on factors such as age, sex, height, and weight, health status, including if you smoke or take part in high-risk activities or occupations. Premiums for similar coverage increase as you become older. Premiums can vary by 50 percent or more. Premium rates also depend on characteristics of the insured. The primary disadvantages of whole life are premium inflexibility, and the interest rate of the policy may not be as lucrative as other savings alternatives. Universal life insurance is a fairly new insurance product intended to provide permanent insurance coverage with greater options in premium payment and the potential for a higher returns. Universal Life Insurance is the most flexible of all the various kinds of policies because it treats the elements of the policy separately. Universal life permits you to change or skip premium payments or change the death benefit more easily than any other policy. A universal life insurance policy also has a cash account. Depending on how interest is credited, the rate of return can be higher because it moves with the interest rates of the financial markets. Term Life Insurance pays a death benefit only, while different types of Permanent Life Insurance — Whole, Universal, and Variable Universal Life can provide your beneficiaries income through withdrawals or loans against a policy cash value. Sometimes you can transfer the term insurance into whole life or universal life, but you begin paying premiums based upon your age at the time of conversion. Policies such as whole life or universal life accumulate cash value on a tax deferred basis, and that value can be used for your retirement income or help provide for a son or daughters education.
Premiums paid by the policy owner are normally not deductible on your federal and state income tax report. Awards paid by the insurer upon death of the insured are not included in gross income for federal and state income tax purposes, however, if the proceeds are a part of the estate of the deceased, it is likely the proceeds will be subject to federal and state estate and inheritance tax. One characteristic that especially favors investment bonds is the 5% cumulative allowance. This permits you the ability to draw 5% of the original investment amount each policy year without being subject to any taxation on the amount withdrawn. If not used in one year, the 5% allowance can be carried over into future years. A maximum tax deferred withdrawal of 100% of the premiums payable.
Affordable and competitive life insurance quotes are available to compare if you know where to look. If you have no life insurance or think you may be underinsured, you should get competitive life insurance quotes today. Its best to get several quotes from different companies. And with a quote, you can easily determine the best price to fit your needs. Comparing quotes is a great way to see how much insurance you can get for your money and gives you the means to compare your rates.
Life insurance is protection that no one should be without. It is something to consider and use as protection for your family. Life insurance seems like one of those things you’ll get around to when you’re older, but the right policy can be a helpful financial tool for anyone who is earning a wage. Life Insurance Rates at all time lows. It is becoming a more affordable investment vehicle and can provide peace of mind, financial stability and security for you and your family.
Tags: family, Finance, Insurance, Life Insurance, personal planning
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