« Life & Health Insurance
the purpose of life insurance?
Life insurance is usually purchased by individuals
to cover loss of income in case of death and to assist with subsequent
expenses such as medical and funeral bills, child care costs, college
expenses, and the costs associated with day-to-day living, such
as mortgage and rental payments. Life insurance may offer both protection
and value accumulation.
What types of life insurance are available?
There are many varieties of life insurance policies, but most can
be divided into three basic types: term, whole life and universal
1) Term life insurance offers protection
for a set number of years at a fixed premium and generally offers
no savings feature or cash surrender value. The face amount of a
term life insurance policy is generally payable only if the insured
person dies during the period during which he or she is covered
by the policy. Term life premiums are usually the least expensive,
but at the end of the policy term, the policy usually may be renewable
at the insured person's current age and at a higher rate. Some term
life insurance policies contain a "convertible" feature,
whereby the term policy can be converted to a permanent life policy,
usually without a medical examination.
2) Whole life insurance (also known
as ordinary life) provides lifetime protection with cash value.
Premium rates are generally constant throughout the life of the
policy contract, and the premiums are payable as long as the insured
person lives. Full payment of benefits is made upon the death of
the insured person, or at attainment of age 97, 98, 99 or 100, depending
on the insurance policy.
Upon death, the insurer retains the policy's accumulated savings,
but the policy has a cash surrender value, against which the insured
person may borrow or which he or she may receive if the policy is
"Limited-payment life insurance" is a variation of whole
life insurance; premiums are paid for a set number of years, such
as 20 or 30 years, or to age 65, after which protection continues
for life without further paymerits. The face value of the policy
is paid upon the death of the insured person.
3) A universal life plan is permanent life insurance
that builds cash value while providing flexible life insurance coverage
to meet your changing needs. In essence, the premiums of a universal
life insurance policy are split in two ways. The premium you pay
goes toward covering the cost of the insurance policy and the remaining
balance is invested and earns interest on a tax deferred basis.
Premium payments are adjustable, as is the amount of insurance coverage
you select. Cash value accumulations are tax-deferred and earn a
competitive rate of interest.
What is variable life insurance?
A variable life insurance policy allows the buyer to participate
in a variety of tax-deferred investment options. You can apply the
interest earned on these investments toward the premiums, potentially
lowering the amount you pay. Under variable life insurance contracts,
the owner can generally allocate the purchase payments among several
types of investment portfolios wherein the cash value is determined
by the performance of those investments. Accordingly, variable life
insurance contracts require that you review a prospectus before
investing money, and they are regulated by the United States Securities
and Exchange Commission.
How are life insurance premiums determined?
There are many factors used, but the most significant in determining
an individual's rate are age, health, occupation and hobbies.
For the policy that best meets your needs,
contact our agency.