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Universal Life Insurance Is A Hybrid Policy That Offers Fantastic Savings

Have you ever heard of flexible premium adjustable life insurance policy? Very often, the universal life insurance policies are referred as that. In fact, do you know what a universal life insurance policy is? It is actually a type of permanent policy based on cash value. Such a policy remains valid for the life of the insured, provided you keep it running with regular payment of premiums. On the death of the insured, it pays a stipulated amount as death benefit, but you can also cash out the policy much earlier and so it offers an investment opportunity as well.

Universal life insurance is divided into two – the first is a pure death benefit and part of the premium amount goes towards building up of this coverage amount. The next part is the savings account into which the other part of the premium amount is deposited and interest accrues to the policyholder on a yearly basis. A great benefit of universal life insurance is that the premiums can be flexible and coverage is provided from both the savings account and the premium. Another benefit is that the insurance company will repay a part of the coverage amount every few years.

Since the premiums are flexible, you can monitor your payments and add more amount at later stages to increase the coverage your family will receive in the future. The main disadvantage of universal life insurance is that you need to pay premiums throughout your life, which can become difficult once you retire. The returns on investment will vary depending on where the insurance company invests your money. The cost of terminating universal life insurance early can be very high.

Because of the high cost of a universal life and consequent disadvantages, many people today opt for a pure life insurance policy such as a term life. Its low price allows you to invest separately and in your own way. You now not only have full control of your investment and choose where to invest, but also can withdraw the amount without jeopardizing your insurance protection. However, before you take any step always receive life insurance quote on line from reputed insurers; compare cost vis-à-vis benefits and then decide.

Instant term life insurance is a popular choice among investors for this is one policy that costs much less that what it did a few years ago. Term life insurance is a death benefit that can be taken for a fixed period of time. Many people take this to cover a wide range of future expenses like paying up a home mortgage, car loan, and school fees and so on. The reason why term life insurance is so reasonable is that premiums are much lower since there is no cash value amount being paid.

Today, we have different types of term life policies. Among them, the level term life insurance policies, which are sold for 5/10/15/20/25/30 years, are the most popular type. They are called so because their rates remain level for the entire tenure of the policy. The instant term life insurance quotes that are available with most online brokers belong to this group. There are annual renewable policies too; under such policies, the rates keep on increasing as you keep on renewing your policy. Some other popular variations are:
• Decreasing term life
• Convertible term life
• No medical life insurance

In decreasing term, the coverage amount will keep decreasing over time. Those who have financial obligations like repayment of a loan will take this policy and try and coincide the time with that of the loan. While the coverage reduces, the premium amounts will remain the same. Some people add critical illness coverage to decreasing term life insurance that will ensure they get paid a certain amount when diagnosed with a critical illness.

The no medical life insurance is also unique policy. Such a policy has the shortest possible overwriting process and so if you buy one, you can have instant term life insurance protection, albeit at a higher rate. Because these policies exempts you from taking medical test, they turn out to be rather risky for the insurer; the higher rates are there to compensate such extra risk. If you want the coverage at a reasonable rate, avoid such a policy. Moreover, whatever policy you buy, buy it when you are still young and healthy. What is more, make sure it covers the vulnerable period completely. Buying fresh coverage later in life will be anything but cheap.

Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on term life insurance quotes and no medical term life insurance, visit his site today.
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Written by Individual Health Insurance

March 14th, 2012 at 10:50 am

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