Nail Ramp asked:


Whenever you think of opting for Life Insurance Policies, the general image or idea that flashes on your mind is that of a salesman trying to entice to purchase a policy under his company name. Now if you are a completely new customer and have no idea as to what kind of deal suits your need, you end up making the wrong policy. Life insurance is also used to pay death taxes and estate settlement costs, to shift wealth from one generation to another or to benefit selected charities.. Most people go in for a life insurance policy to ensure that upon his/her death, the beneficiary is financially secured. Life insurance policies are typically divided into two major types: term insurance and permanent insurance. From these two basic policies, the insurance industry has developed a number of products using the same essential principals. People on a general basis would consider a life insurance policy to have no time limits, which always isn’t the case. Lets discuss the two types of life insurance policies in detail.

Term Life Insurance: A term life insurance policy pays the beneficiary or the nominee the due amount only if the insured individual expires during the time/ tenure of the policy. No benefits are paid if the insured exists beyond the term of the policy and there is no investment or cash value feature inherent in this type of policy. For this reason, term insurance policies will carry the lowest premiums in the earlier years of the policy. However, as an individual gets older, term insurance gets more expensive. A major problem with term insurance is that with the expiry of the insurance policy, the insured would need to replace or renew the policy at a higher premium.

Permanent Life Insurance: A permanent life insurance policy, often referred to as whole life insurance, is intended to provide protection throughout the life of the insured. It is an alternative to term life insurance and the premium is a bit costlier too. This is done to maintain the premium level while the policy is in place. Moreover as the insured keeps getting older the mortality rates increases. A couple of permanent life insurance policies are the universal life insurance policy and variable life insurance policy. A universal life insurance policy provides flexibility for the insured by allowing the individual to select the premium they would like to pay. Variable life insurance is a policy in which the insured has the ability to direct the investments of the cash surrender value to achieve potentially higher returns than could otherwise be realized. If the investments perform well, the death benefit will increase.

Determining your need prior to choosing a policy is important. Insurance is basically done when you have young members in your family, there is one bread earner and insufficient savings to meet the demands of the survivors in case of a disaster. The type and amount of insurance which is being considered must also be predicated on the affordability of the premiums. A policy which is too expensive to carry may result in an early termination. The insured would then need to reapply, usually at higher costs, and potentially subject him or herself to a physical examination to determine overall health.

Going by the current premium values in the market the top 5 insurance companies would be ranked as

1) ICICI Prudential Life Insurance

2) Birla Sun Life Insurance

3) HDFC Standard Life Insurance

4) Life Insurance Corporate of India

5) Bharti-Axa Life India.

Life insurance is a very complex product and, yet, is essential for many individuals in order to protect their loved ones or meet the other needs for which it is being purchased.



Anita

Emeka Ezidiegwu asked:


The types of life insurance that are available can make selection difficult. With all of the different types of life insurance it is important to understand the benefits of each type before taking out a policy. When choosing what type of life insurance would be best for you and your family it’s important to understand how each type works.

Term Life Insurance: Term, or temporary, insurance is one type of life insurance. Term insurance covers the policy holder for a specified number of years, for a predetermined premium. This means that the policy holder knows how much their life insurance will cost, for the entire term of the insurance policy. Term insurance, unlike other types of life insurance, does not build any cash value. Also, most term life insurance provides death benefits only.

Whole Life Insurance: Whole life insurance is another of the different types of life insurance. It is considered permanent insurance. Permanent insurance is considered to remain in force until one of two things happens, the policy holder dies, and the insurance is paid, or the policy holder cancels the policy, either intentionally or by failing to pay the premium. The only way that the insurance company can cancel the policy is if they have evidence that the policy holder committed fraud when completing the application. Whole life coverage, like all permanent types of life insurance — builds cash value as you pay your premiums. This accumulated value can be accessed by withdrawing the money, borrowing against it, or surrendering it to the insurance company and receiving the surrender fee.

Different types of life insurance have different advantages and disadvantages: Whole life coverage offers a guaranteed dollar amount upon the death of the policy holder, a known cash value, predictable premiums, and the knowledge that the insurance company cannot cancel the policy as long as premiums are paid.

Term life insurance provides affordable coverage for many people. There are different types of life insurance available that offer term coverage. Annual renewable term coverage guarantees that the insurance company will renew the insurance policy each year, although the premium amount may change. Another specialized type of life insurance that is considered term insurance is mortgage insurance. The face value of mortgage insurance decreases each year. The purpose of mortgage insurance is to cover the cost of the household mortgage until it is paid off, if the main breadwinner dies.

While the different types of life insurance can seem confusing, there are a few basics that can make it easier to compare policies. If you are considering term life insurance, know the amount that the policy will pay off at death, the length of the coverage and the cost of the premium. If you are considering whole life insurance, know the cash value of the insurance and the return you can expect on the premium. In some cases, it makes sense to purchase a less expensive term policy and place the difference in a higher yielding investment, while for other people whole life insurance is the safer investment.

 



Heather

Alice Z asked:


Agents are always extremely keen about selling my family whole life insurance instead of term. According to the agents, whole life is preferable to term since it does not expire and as a result the beneficiary is guaranteed some payment upon the death of the insured. However, why would the insurance company profit from such a setup if they are bound to pay back an amount that is at least equal to the total amount paid?

I have tried to do some research on my own, but I still can’t seem to fully understand this matter. Any help will be greatly appreciated!

Shane