Understanding The Type Of Insurance Available To You
By: Todd D. Tucker
Some Basic Terms:
Term Life Insurance
A life insurance contract which provides coverage for a specified period of time and expires without value if the insured survives the stated period. The face amount can be structured to remain constant throughout the term (Level Term), increase over time (Increasing Term), or decrease over time (Decreasing Term). Many Term policies are also renewable and convertible up to some stated age. As a general rule, Term life insurance does not accumulate cash value.
Whole Life Insurance
A form of life insurance which has a guaranteed level death benefit until death or age 100, whichever comes first, and which builds a guaranteed cash value which will equal the face amount of the policy at age 100. Premiums for a Whole Life policy are also level and may be paid for as long as the insured lives or age 100 (called Straight Life or Continuous Premium Whole Life), for a limited period (called Limited Pay), or in one lump sum (called Single Premium Whole Life).
Considered to be an interest sensitive form of permanent protection, Universal Life combines Term Life insurance with a tax deferred savings plan (cash value). The death benefit, premium amount, payment period, cash value growth, and protection period are all flexible.
In a life insurance policy, the amount payable in the event of death as stated on the policy face.
The payment required to keep an insurance policy in force. Premiums are paid in advance, and may be paid in lump-sum payment or periodically.
The policy proceeds to be paid upon the death of the insured.
The above information gives you the basic terms that you will hear from an agent or see in your email. Please understand that the above terms ARE NOT all-inclusive. The "honest to goodness" truth is that the cheapest insurance that you can get is Term Insurance. It does not make sense to buy any other type of Term Insurance, but level Term Insurance in most cases. It's just so affordable… Many Term policies are convertible to other types of insurance, but the ability to do that usually has some time limit. Make sure that you know what that limit is, and keep that information handy for Step 9 of my eBook (see below). For example, let's say you bought $650,000 worth of Term Insurance for 20 years. Let's say that you are one year (just an example) into your policy and you get some type of health problem that is long-term. Get your policy out and speak again with your agent, have him or her help you through the process of determining if you need to convert to permanent insurance.
Todd is the author of the eBook, "Ten Steps You Can Take To Avoid Sitting Down At The Kitchen With A Life Insurance Agent," a guide to understanding the basics determining how much life insurance you need versus how much you can afford...in the comfort of your own home before you talk with an agent!
Todd is a licensed insurance agent for the state of Ohio since 1999. Todd has focused most of his time educating his clients as to how insurance works versus "selling" to them.
He is now specializing providing insurance information in a non-threatening manner to those individuals who have never had to go through the experience of purchasing insurance.