There has been an on-going battle in the life insurance industry involving term life insurance and whole life insurance. The industry has survived the battle but the consumer is still asking the same question. Which one is better? The question is flawed because these two policies serve two different purposes. The real battle comes over the concept of buying term and investing the difference or the purchase of permanent life insurance. The proponents of buy term and invest the difference surmise that the policyholder would do better investing the difference in premium costs that you save by purchasing a term policy rather than a whole policy. Permanent life insurance was never created to be an investment. It was created to take care of permanent life insurance needs. The cash value accumulation within permanent life insurance is an added benefit and not an investment feature. The best life insurance portfolio is a combination of both permanent and term life insurance.
Permanent Life Insurance - Permanent life insurance should be purchased for permanent needs. Final expenses and life insurance for retirement are two basic permanent life insurance needs. Life insurance at retirement is critical because it gives you more options to use your retirement benefits for income rather than life insurance.
Term Life Insurance - Term life insurance is for temporary needs. Term life insurance will compliment your permanent base of life insurance. Decreasing term and level term riders can be added to your permanent policy to take care of temporary needs like mortgage protection and short term debt.
It is important to understand why you are purchasing life insurance. You will be much more content when you establish in your own mind the reasoning behind the purchase. Do a little mini-need analysis. Think about what is important to you and who is important to you. Life insurance is a gift of love.
Life insurance is one of the most common forms of insurance available on the market nowadays. Life insurance is a simple form of insurance, not as complicated as other types of covers. Upon an agreement done on a life insurance scheme, you have to pay premiums for a set number of years as defined by your policy. The life insurance policy will only pay out if you are unfortunate enough to die before the policy ends.
So, if you want to buy life insurance, you would most probably go and visit a life insurance broker. The life insurance broker will use certain terms and specific words that you may not be familiar with. Understanding everything before fully committing to a life insurance policy can be vital for you. Ignoring important facts can affect your life insurance policy on a whole. Therefore, knowing the different life insurance terms can be useful to ensure that you are not fooled by the life insurance advisors or brokers that you visit. Having this knowledge may as well help you choose the most appropriate life insurance for you.
There are many terms used when talking about life insurance or when agreeing on a life insurance product. Let's have a look at some of these terms.
Sum assured is used by insurers to describe the smallest amount assured to the life insurance policyholder. The sum assured also helps the insurers decide upon the amount of premiums that the insured has to pay. Therefore, during the occurrence of death, the policyholder may be awarded the minimum of this sum.
The beneficiary is the person who has been mentioned in the life insurance policy by the policyholder. It is the only person who would be eligible to obtain the benefits awarded by the life insurance policy in case of death of the policyholder.
An endowment policy is a mixture of life insurance protection and investment. The money is invested in debt mechanisms while the life insurance policy stays in force. It also pays the insured a stated amount after the time specified in the contract. On the other hand, it as well allows the life insurance policy to disburse an amount to the beneficiaries in case the insured dies within the time specified.
The premium is the amount that has to be paid to the insurance company either in a monthly, yearly or quarterly manner in order to be protected under life insurance. The premium amount may vary according to the age, sex and type of life insurance policy chosen.
A whole life policy is a type of policy that can provide life insurance protection till the death of the insured. The whole life insurance policy can as well provide returns on the premiums paid.
The policy term is the amount of time in which the policyholder has to pay premiums in order to benefit from life insurance protection.
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