Life Insurance
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Life Insurance
There are two major types of life insurance, term, and whole life. Whole life insurance is sometimes called permanent life insurance, and it encompasses several subcategories, including traditional whole life, universal life, variable life, and variable universal life insurance.
Life insurance products for groups are different from life insurance sold to individuals. The information below focuses on life insurance sold to individuals.
Term Insurance is the simplest form of life insurance. It pays only if death occurs during the term of the policy, which is usually from one to 30 years. Most term policies have no other benefit provisions.
There are two basic types of term life insurance policies, level term, and decreasing term.
For more information on the different types of term life insurance, contact us today. Whole life or permanent life insurance pays a death benefit whenever you die, even if you live to 100. There are three major types of whole life or permanent life insurance, traditional whole life, universal life, and variable universal life, and there are variations within each type of life insurance.
In the case of traditional whole-life insurance, both the death benefit and the premium are designed to stay the same (level) throughout the life of the policy. The cost per $1,000 of benefit increases as the insured person ages, and it obviously gets very high when the insured lives to 80 and beyond. The life insurance company could charge a premium that increases each year, but that would make it very hard for most people to afford life insurance at advanced ages. So the company keeps the premium level by charging a premium that, in the early years, is higher than what’s needed to pay claims, investing that money, and then using it to supplement the level premium to help pay the cost of life insurance for older people.
By law, when these over-payments reach a certain amount, they must be available to the policyholder as a cash value if he or she decides not to continue with the original plan. The cash value is an alternative, not an additional benefit under the life insurance policy.