Life Insurance

last updated 06/23/2022

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Reading: What is the life insurance industry all about

Life insurance provides financial protection to loved ones in the event of the policyholder’s death. Once a policy is issued, an insurer cannot cancel it based on a change in the policyholder’s health status. There are several types of life insurance, allowing consumers to find a type of policy that works for their personal situation.

term life insurance

Term life insurance provides coverage for a specified period of time. Term insurance policies are typically issued for 1, 5, 10, or 20 years, or up to a specific age (such as 65). Term policies only pay a death benefit to the beneficiary if the policyholder dies during the specified term and are therefore a good option when the policyholder needs protection for a temporary time or a specific need. term insurance has the advantage of being cheaper than permanent insurance, particularly in the early policy durations. There are a few different types of term life insurance policies:

  • The most common, level term insurance, is characterized by uniform face amounts of the policy over the life of the contract, usually 10, 20 or 30 years. The death benefit amount and policy amounts are generally guaranteed to remain level during this time, regardless of the health status of the insured.
  • decreasing term insurance policies have a decreasing death benefit. A policyholder can use these types of policies to cover financial obligations that decrease over time, such as a mortgage.
  • renewable term insurance guarantees the policyholder the right to renew at the end of the contract period without evidence of insurability, as long as the premium is paid.
  • Convertible Term Insurance allows the policyholder to convert a term insurance policy into a permanent insurance policy that will build cash values ​​in later years. These premiums are generally higher to reflect the additional cost of building cash value for the policy.
  • term insurance policies may also have a return-of-premium (rop) feature that refunds some or all of the premiums paid at the end of a level term period if they are not paid death benefits. Policies with this feature are more expensive because the policyholder has the ability to receive cash reimbursements.
  • See also: What Is The Average Settlement Payout For A Whiplash Injury?

    whole life insurance

    Whole life insurance provides a fixed amount of insurance coverage during the life of the insured, with benefits paid only at the time of the insured’s death. Whole life policies are designed to build tax-deferred cash value, which is the accumulation of premiums collected less applicable expenses and applicable insurance charges, and allow you to borrow against the cash value of the policy. As required by state law, whole life policies contain non-forfeiture values ​​payable in cash or some other form of insurance in the event the policy lapses due to non-payment of required premiums or the policyholder decides to waive the coverage. There are several types of whole life insurance policies.

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