The Insurance Expert Guy

What Is Term Life Insurance

2011-01-07T00:03:00.001-06:00

Welcome back to my blog my friends.

In this post I would like to educate you about Term Life Insurance. I don't know what kind of knowledge you have about Term Life Insurance and whether you are new or have some basic knowledge about Term Life Insurance, after you have read this post you will be very confident about the knowledge you gained on Term Life Insurance and you will able to teach this Term Life Insurance information to another person without any hesitation. Most importantly, you will also be able apply this Term Life Insurance knowledge for your personal insurance needs.

Term Life Insurance was the first Life Insurance was invented -before all of the other types of of Life Insurance. Term Life Insurance provides temporary protection and it is the lowest cost of all types of Life Insurance. Term Life Insurance does not accumulate cash value and its policy remains in force for a specified period of time, after which coverage terminates. Term Life Insurance provides a benefit only if the insured dies during the period of coverage.

There are three different types of Term Life insurance. 1). Annually Renewable Term Life Insurance sets the term of coverage as one year. Each year, the policyowner (the person who owns the policy) may renew the policy without having to provide evidence of insurability. However, the premiums are subject to increase upon renewal. 2). Level Premium Term Life Insurance sets the term of coverage for 5 years, 10 years, 20 years, 30 years & 40 years. The premium remains level during the initial term of coverage. When the initial term ends, the policy may renewed without having to provide evidence of insurability. However, the premiums (monthly payments) are subject to increase upon renewal. 3). Decreasing Term Life Insurance sets the premium (monthly payments) level during the term of coverage, but the death benefit decreases with time. Typically, the death benefit decreases to zero dollar when the policy reaches its last year of term. Decreasing Term Life Insurance may also be called Mortgage Protection Insurance or Credit Life Insurance.

Decreasing Term Life Insurance is designed to lower the cost of premium (monthly payments) and for this reason, its main purpose is to purchase it to protect the loan of a mortgage. Ideally, when purchase Decreasing Term Life Insurance to protect a mortgage loan is to purchase the death benefit amount equal to the mortgage loan amount. When mortgage loan is paid down, the Term Life Insurance benefit of the policy decreases accordingly to the paid down mortgage loan amount. Once the mortgage is paid off, the Decreasing Term Life Insurance death benefit is also decreased to zero. Since the death benefit is designed to decrease, the premium (monthly payments) is also very low.

When Decreasing Term Life Insurance is purchased as Credit Life Insurance is to protect against a loan such as an automobile loan. If in the event the owner of the automobile is unable to pay for the loan the Credit Life Insurance policy pays the loan off for him or her.

I hope this Term Life Insurance post has been a valuable information for your insurance education as well as for your personal insurance needs. Please stay tune for Whole Life Insurance in my next post.

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2011-01-02T23:40:00.002-06:00

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What Is Life Insurance?

2010-12-27T22:13:00.063-06:00

Hello my friends,

This blog is created in the soul purpose of providing Life Insurance education to help you better understanding what Life Insurance was invented for and what are the use of its purposes. For this article, I would like to educate you about life Insurance policy in general.

First, please let me take you to the origins where Life Insurance was invented. Life Insurance can be traced back to the 17th-century in England when merchants made arrangements to cover the potential losses of cargo items in trans-Atlantic trade. Lloyd's of London became the first insurance house in the Atlantic world, named after the coffee shop where the underwriters met at to exchange news.

There are different types of Life Insurance are now available to protect consumers in the global consumer economy of the 21st century. These include but are not limited to: Health Insurance, Life Insurance, Automotive Insurance and Homeowners Insurance. Life insurance is to protect the financial loss of a living person or persons in the event of a premature death of a person or persons who the living person or persons should have the potential for financial loss directly from the result of a death.

There are five different types of Life Insurance. They are Term Life Insurance, Whole Life Insurance, Universal Life Insurance, Index Universal Life Insurance, and Variable Universal Life Insurance. Here is the basic of how Life Insurance works. The people who generally looking for a Life Insurance coverage are people who have the potential for financial loss if there should be a pre-mutual death in the family. And for one person to be able to purchase a Life Insurance policy for another person, they both must have insurable interest. For example, the husband of a wife or the wife of a husband, the key person of a corporation and its owner, the children of a father and mother, or the father and mother of their children. For brothers and sisters, there is an exceptional if they have the potential for financial loss if a brother of sister should die. They can purchase life insurance coverage on each other's life. Two best friends doesn't have any insurable interest. Therefore, they can not purchase a Life Insurance policy on each other's life.

The policy holder (the person or persons of an entity who is purchasing the Life Insurance policy) pays a premium to the Life Insurance company in exchange for a death benefit (money) if the insured (the person whose life is being insured) dies. The insured or the policy holder pays the monthly premium (monthly payment) to the Life Insurance company as long as the insured or the policy holder wants to keep the Life Insurance policy or until the policy expired; and the Life Insurance company promised to pay the death benefit to the insured's designated beneficiary (the person or persons or entity whom to be receiving the death benefit) upon the death of the insured if the premium is paid up to date; and the Life Insurance policy is still enforced at the time the insured is passing.

When the death of an insured occurs, a claim is made to the Life Insurance company for the death benefit (money). If the death of an insured happened after two yeas the policy has being enforced, the Life Insurance company (by law) is required to pay the claim immediately and send the death benefit (money) to the insured's designated beneficiary. If the Life Insurance policy has not been enforced for two years, the Life Insurance policy is still under the Incontestability Clause and the Life Insurance company still have the right to investigate the caused of the death of the insured. In this case, it the Life Insurance application had been misled or concealed information about the insured's medical history then the Life Insurance have the right to deny the claim and refund the premium paid back to the policy holder, and then the case is closed.

The beneficiary has the option to choose how he or she want to receive the Life Insurance death benefit in Lump sum (a single payment in cash tax free), Interest only (leave the money on deposit with the insurance company). The Life Insurance company will pay interest on this money and the interest received is taxable income to the beneficiary), Installment options (the Life Insurance death benefit will be paid in equal installment to the beneficiary and the unpaid portion of the death benefit will earn taxable interest income), or Life annuity options (the Life Insurance death benefit will be paid in guaranteed installments for the life of the beneficiary. The Life Insurance company will pay interest on the unpaid portion death benefit and this interest is also treat as taxable income to the beneficiary).

The Life Insurance death benefit of a life insurance policy is tax free (you will not have to pay tax on the money you received from a Life Insurance policy. It is not treat as income) and is also protected from all creditors (meaning, if you defaulted your $50,000 credit card debt payments and you got sued for by a law firm; and you also receiving a $100,000 Life Insurance death benefit from a Life Insurance policy, you are protected by law and the law firm who sued you for the $50,000 credit card debt can not come after your $100,000 Life Insurance death benefit).

I hope this Life Insurance article is an educational and informative for you. Please stay tune for more valuable Life Insurance education.