are various aspects to consider before getting a life insurance policy.
One of them is a sustained doubt about the significance and need for
life insurance. A life insurance policy is relevant for all individuals
who are concerned about the financial future of their family in case of
Apart from the purely protectional needs, life insurance
policies, like whole and variable life insurance, offer the opportunity
for tax-free investment and reaping dividends, and they have a built-in
cash value. Purchased with due discretion, it can be utilized as liquid
cash to cater to the various needs of policyholders.
various types of life insurance policies customized to suit the
different needs of various individuals. Depending on the number of
dependants and kind of insurance needs, a suitable life insurance policy
can be chosen after consultation with financial experts and advisors.
life insurance and term life insurance are the two basic forms of
insurance policies. With time, there have been different variations to
suit the changing demands of people. A term life insurance policy is
also called temporary or short-term life insurance. These are purely
protection-oriented and provide death benefits only if the insured dies
within the period specified in the policy. In case the insured lives
past the specified duration, no money is given.
short-term insurance needs, like a young individual with dependents, a
house loan or a car loan, favor this kind of insurance policy because
they are cheap and affordable in comparison to whole life policies. In
the initial years the premiums are very low; however, as the mortality
risk of the insured increases with age the premium cost increases and at
time becomes more than that of whole life insurance.
now two kinds of term life insurance, namely level term (decreasing
premium) and annual renewable term (increasing premium) policies. The
premiums of level term are initially higher than renewable term, but
become lower in the later years. Whole life insurance has an ingrained
cash value and guaranteed life protection features. The initial steep
premiums of whole life insurance may exceed the actual cost of the
insurance. This surplus, which is the cash value, is added to a separate
account and can be used as a tax-free investment to reap dividends, and
is also used to enable the insured to give a level premium latter on.
There is a guarantee of getting the death benefit on the maturity of the
policy or death of the insured, apart from cash value surrendered in
case of cancellation.
Return of premium is popular because it
combines the features of whole and term policies. It costs double the
amount of a term policy. The policy is made for a set time, but full
value is given on death within that period or in case the policy
matures. Universal, variable and universal variables are different
variations of whole life insurance policies. A universal life insurance
policy offers the flexibility to the insured to choose the kind of
premium payment, the death benefits and the coverage amount.
life insurance policies enable the insurance buyer to invest the cash
value in direct investment for a greater potential return. A universal
variable insurance policy integrates the flexibility factor of a
universal policy and the investment option of a variable policy. Single
purchase life insurance enables a buyer to buy the policy and own it
through a one-time premium payment. A survivorship or second-to-die
insurance policy is a joint form of life insurance policy which is
devised to serve the specific purpose of certain individuals. Apart from
these, there are also endowment life insurance policies. Endowment is
with profit kind or unit-liked kind. On maturity of the policy or on the
death of the insured the value of the policy or the amount insured,
whichever is more, is given back.
Life insurance policies differ
from company to company, and hence the various parameters have to be
analyzed meticulously with the help of experts and financial advisors to
get the best deal.