Permanent Insurance Explained – Permanent Life Insurance Types

Permanent insurance, also referred to as permanent life insurance, affords the policy owner the opportunity to accumulate a little cash in addition to providing a death benefit in the event of premature death. When most people today think about life insurance today they think in terms of the largest amount of cash they can leave for a spouse and children. The result is that they buy a term policy. Term life insurance is the cheapest type policy you can buy. The problem with this however is that if you keep the policy for the duration and don’t die there is nothing in it for you.

Your permanent insurance policy is entirely different. It costs more than term but if you keep it for 20 or 30 years or longer you will likely get back whatever you have paid into it if you choose to surrender it for it’s cash value. There are many different types of permanent policies. Let us take a look at a few of them.

Universal Life

Universal life insurance combines a term policy with a savings plan. The amount of money you apply to savings is flexible. It does not need to ne a set amount. This policy also pays a death benefit in the event the insured dies.

Variable Universal Life

This policy is also considered a permanent policy as it combines an investment plan with a permanent type policy. A special licence, an NASD License, is needed to sell this product as some of your money is invested in mutual funds or other equity linked products.

Variable Life

This policy is a combination of whole life insurance and an investment. The agent selling this product also needs an NASD License in addition to his Agents License.

Whole Life

This policy has been around probably from the idea of life insurance came into existence. This is the original permanent policy. Most of these policies last to age 100.

Single Premium Life

This policy is a variation of the whole life policy. It allows you to pay one premium and keep your policy for as long as you wish. You can turn it in to the company at any time for it’s cash value.

Limited Pay Life

This permanent insurance policy is set up so that you can pay into it for a given number of years and pay no more thereafter. You have your policy for as long as you live.

Graded Premium Life

The first year you pay a smaller premium which increases every year for a given period of time, usually 5 or 10 years, then levels off. The premium remains level for the balance of the time you keep your policy. The first years premium is usually slightly more than half of the payment required for a whole life policy. When the premium levels off it is again more than you would pay for a whole life policy.

All permanent insurance policies have cash values and most earn dividends is the company performs well with it’s investments.

For additional information go to: http://www.life-insurance-answers.net/types-of-life-insurance.html

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Life insurance policy provisions. Most of us tend not to pay sufficient attention to the details of a life insurance policy until someone dies or until we are in dire need of some cash. The thinking goes something like this. My husband is dead, he did mention that he had some life insurance, I wonder how much? I do need some cash, how does the insurance company pay out the policy proceeds? Was I named as beneficiary or were our children named? These are just a few of the questions that may come to mind. Let us find out what your policy does in this type of situation.

The Policy Contract

One of the most important provisions of your life insurance policy is the contract itself. This states that upon the death of the insured a certain sum will be paid to a named beneficiary. In family situations the proceeds are usually paid to the spouse or adult child. In business situations the death benefit will be payable to the business itself, a partner or shareholders. This sum of money can be paid in one lump sum or in income form.

Another important contractual agreement is the incontestability clause which simply states that if, for example, you give the life insurance company any false information they have the right to withdraw the policy or contest it upon death. There is a limited period in which this policy can be contested, usually 2 years.

This incontestability clause also applies to suicide as well. If an applicant buys a policy with the express intent of committing suicide they can forget about it. If suicide is committed within the contest-ability period the amount paid will be limited to premiums paid plus interest. If suicide occurs after the contest-ability period, usually 2 years, the life insurance company will pay the full sum.

Another provision in your policy worth your consideration is the misstatement of age clause. If you misstate your age on your application form the amount paid upon death will be limited to the amount of coverage your premium would have bought at the correct age.

Ownership Of The Document

The owner of the life insurance policy is usually the applicant even if the coverage is on another persons life. A parent would own a policy on a child, a spouse may own a policy on his or her partner, a business may own insurance on a partner, shareholder or employee. Whenever the insured is of age, is not a minor, this person must approve of the policy being purchased on his or her life. This insured must complete the medical part of the application and sign it.

Premium Payment And Reinstatement

The owner of the policy is required to pay the premiums at the required time whether it be monthly, quarterly, semi-annually or yearly. Failure to do so will put the policy in a state of lapse after 31 days. If premiums are paid annually, for example, and the insured should die after one month the beneficiary will receive the balance of the years premium together with the face amount of the policy.

If the policy goes into a state of lapse it may be reinstated by paying the missed premiums or by reinstating the policy. If the owner chooses to reinstate the policy he should be aware that this action may put him or her into a higher premium rate as he will be older. The company may also require a medical exam in order to put the life insurance policy back in force.

Beneficiaries

There are 3 levels of beneficiaries in your life insurance policy. First there is the primary beneficiary. This is the person to whom the proceeds of the policy will be paid. If the primary beneficiary should die before the insured and if the insured has not changed or named someone else as beneficiary before his or her death the benefits will be paid to a named contingent beneficiary.

As a safety net you also can name what is commonly referred to as further payees. In other words, if the primary beneficiary as well as the contingent should die before the insured the proceeds would go to further payees, as per the contract.

These general policy provisions may apply to all life insurance policies. If, however, your policy is a permanent one there are additional provisions that would apply.

Find More Life Insurance Contract Provisions Articles

Mortgage life insurance pays the mortgage balance on the insureds home in the event of the insureds death. While it’s a good idea to have life insurance protection, enough to pay off the mortgage balance of the family home, it’s important to understand this type of policy to get the best value for your insurance dollar.

Decreasing Term Life Insurance

The most common option in mortgage life insurance is decreasing term life insurance. This policy will pay the balance of the mortgage in the event of the insureds death. The premiums are inexpensive and are level for the period of the mortgage. However, the are rarely much less expensive than level term life insurance for the same period of time.

Level Term Life Insurance

The decreasing term policy pays the balance off the mortgage at the time of the insureds death. You can use a level term policy to accomplish the same task. However, there will be more left over in the later years.

As time goes on, the mortgage balance is decreasing. However, with a level term life insurance policy, the protection is not decreasing. It remains the same. Therefore, you will have money from the death benefit left over. This is important, because there are often bills left behind that need to be paid – and the cost of a funeral.

Permanent (Whole)  Life Insurance

Whole life insurance is considerably more expensive. While there are uses for this type of policy, it is rarely used strictly for mortgage protection.

For more information on these and other types of life insurance policies, go to http://www.4lifeinsurance.com.

Low Cost Level Term Life Insurance

Term Life Insurance is a low cost policy that provides the insurance for a set term of years.

Multi-year Term life insurance is much more common than single year annually renewable life insurance. The term periods are usually  5, 10, 15, 20 and 30 years.

5 Year Level Term Life Insurance

This is a low cost policy; the affordable premium provides life insurance protection for 5 years period and is renewable for subsequent 5 years. The premium and coverage remained the same for the first five years. After the term expires, it is advisable to medically re-qualify. Otherwise, the rate goes up substantially.

When is it best used?

• When a temporary need exists.
• When a small premium is desired.
• When additional coverage needs to be added quickly and easily.

Waiver of Premium Rider

This covers the cost of the insurance in the even of disability. In general, these are more important in more expensive policies.

Accidental death benefit

This pays a multiple of the death benefit in the event of death do to accident. This feature is better used when the insured is younger. However, unless the insured has a dangerous occupation or hobbies, the additional cost of this feature might be better spent on just raising the face amount.

There are many types of term life insurance. To learn more, please visit us at http://www.4lifeinsurance.com

Life Insurance Contracts and Implications

Every life insurance policy, although there is no nationwide uniformity in wording, will contain certain provisions which, in one form or another, are found in all life insurance policies. These may be called the “contents” of the policy. There are two important types of options available to purchasers of most insurance policies: dividend options and settlement options. These may be called “policy options.” Finally, there are certain clauses which may or may not be affixed to the life insurance contract.

The first page of the policy is usually a statement of the actual insuring agreement between the company and the insured. The name of the beneficiary frequently is stated on the first page and the policy declares that the provisions attached are all part of the contract. The amount of the premium to be paid each quarter or each year may be stated on the front page as well. The page concludes with the signatures of the officials of the company who are authorized to sign contracts and insurance papers. These officials usually are the president, the secretary, and the registrar. Following this summary of the contract come the general provisions of the policy. Some terms that follow include circumstances including suicide, incontestability, correction of age, delay clause, deduction of indebtedness, assignments, and so on. There is much to read and much to consider. While many of these conditions and terms seem similar, it is crucial to be completely informed of each policy. Ultimately, you want to choose the best life insurance policy for you.

When it comes to life insurance, the annuity is the true insurance. It is insurance against living too long, in another words, against outliving one’s ability to provide an income for him/herself. Basically, an annuity is a periodic payment made by the company in return for its having received a sum of money, the premium, from the annuitant or from another who paid the premium on behalf of the annuitant.

There are, in general, three methods of buying an annuity; by the single-premium method, by the annual-premium method, or by the use of the proceeds of a life insurance policy. Situations in which a person has accumulated significant funds to buy an annuity with a single lump sum occur less frequently than those in which a person early in life embarks upon a systematic method of buying an annuity through annual payments to a life insurance company. One of the very important settlement options offered by most life insurance contracts is the life income. This often provides the best solution to the problem of life-long support of the beneficiary. In regard to the start date of benefits beginning, annuities may be immediate or deferred.

All in all, in consideration of the amount of time you have to put into reading all of the fine print, and how many different policies you may have to go through to find the right one, it tends to get overwhelming. Sometimes it is better to go with an easier option, such as online life insurance quotes without medical exams. Some insurance companies nowadays are even letting you qualify and sign up within minutes, provided you have sufficient credit. Whatever your choice, make sure you are comfortable with it, as this is no joking matter; it’s about your life, and the protection of your loved ones.

There are many myths surrounding life insurance, but ten in particular seem to be most common. They are:

1. I’m single, or married with no children, so I don’t need life insurance.
2. I can’t afford life insurance.
3. I’m a stay-at-home parent that doesn’t work. I don’t need life insurance.
4. I have a life insurance policy through my job. If I take another job or get laid off, I can take the policy with me.
5. My beneficiaries will have to pay income taxes on the proceeds from my life insurance policy.
6. If I travel out of the country and something happens to me, I am not covered.
7. If I get a term life insurance policy, I can’t convert it to permanent or whole life insurance policies.
8. I don’t need life insurance once my children are adults.
9. I have a comfortable savings, so I don’t need life insurance.

10.  Life insurance is expensive.

However, put the myth aside. This is the reality:

1. I’m single, or married with no children, so I don’t need life insurance. Fact: Life insurance can help you cover your debts as well as help you provide for your loved ones in the event of death, even for those without children. If you are in this group, you may carry debts that you prefer were taken care of rather than taken out of assets left to your loved ones. Still, others may use life insurance proceeds to help nieces, nephews, cousins or siblings achieve their financial goals. For a modest premium, life insurance can help to provide for those who are left behind.
2. I can’t afford life insurance.  Fact: Term life insurance, which is life insurance purchased for a period of time, is very affordable for many people. For example, if you are a healthy, non-smoking, 35-year-old female who has a good family health history, you may be able to purchase a policy for less than an evening at the movie theater per month. Get a term life insurance quote now.
3. I’m a stay-at-home parent. I don’t need life insurance. Fact: If you’re a stay-at-home parent, you may not provide an actual paycheck for the household, but you do provide services that would cost tens of thousands of dollars to replace. These include: the cost of day care, a chauffeur or taxi service, a cook and a home cleaning service to name a few. If you have an individual life insurance policy, this may help to ease the burden for the loved ones if you should pass away.
4. I have a life insurance policy through my job. If I take another job or get laid off, I can take the policy with me.Fact: Typically, your group life insurance purchased through an employer isn’t portable – meaning if you leave your job, you’re probably also leaving your life insurance protection behind. However, if you own an individual life insurance policy purchased through an insurance agent or a financial professional, leaving your job will have no effect on your coverage.
5. My beneficiaries will have to pay income taxes on the proceeds from my life insurance policy.Fact: Your life insurance death benefits are generally income tax-free; yet very few people know this.
6. If I travel out of the country and something happens to me, I am not covered. Fact: In the unlikely event you pass away while in a foreign country, the policy would most likely pay out to the beneficiaries. However, many life insurance policies exclude certain countries, such as those currently on the U.S. Department of State’s Current Travel Warnings List; so it’s important to review your life insurance policy prior to leaving the country.
7. If I get a term life insurance policy, I can’t convert it to permanent or whole life insurance policies. Fact: Depending on the policy purchased,  it is possible to convert a term life insurance policy into a permanent policy. However, individuals seeking to do so should expect an increase in premium. In addition, the conversion may have certain limitations or require renewals. Many people like to purchase term insurance, which tends to be less expensive, while they’re younger because it may make obtaining a preferred premium easier when they attempt to convert later.
8. I don’t need life insurance once my children are adults. Fact: Life insurance can help achieve a goal of leaving an inheritance to children, other loved ones, or help relieve the burden of paying for final costs such as a funeral or final medical bills.
9. I have a comfortable savings, so I don’t need life insurance. Fact: It is easy to underestimate the amount of savings that is required in the event of death. Most Americans do not have enough in their personal savings to cover these expenses. If you don’t have enough saved, it is possible your loved ones won’t be able to pay off final expenses or be able to hold onto assets like a home. Use this calculator to determine how much life insurance you may need.
10. Life Insurance is Expensive. Fact: By way of illustration, $250,000 of Term life insurance for a 35 year old man can cost as little as $25/month. This is hardly expensive.

For more quotes and information on life insurance, go to http://www.4lifeinsurance.com.