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First of all, life insurers (also known as carriers) offer more than just traditional life insurance. One of today’s hot products is Long Term Care (LTC), we will talk about LTC in another article. They also offer products like Annuities, Critical Illness and Disability Income insurance. You can purchase these products through agents, which typically sell only the carrier’s product they are associated with, brokers which sell products from various carriers and on your own through the Internet.

An introduction to Life Insurance products starts with the two basic categories that life insurance products fall into. These are those with Cash Value and those without Cash Value. An insurance policy with a cash value is a policy that has a value for the insured that they can borrow or withdraw from. Cash value is built up by paying premiums to build up your cash value. Typically, those without cash value are Term Insurance products. Those products with a cash value, typically are investments that last until you die. A Whole life policy and a Universal life policy are examples of policies with a cash value.

In this article, we will concentrate on term life policies. These are the most common types of policies and do not have a cash value. You purchase a term policy for a specific amount of time, usually 10 or 20 years. Since these policies have no cash value, they are generally a very good value. A term policy is the ideal choice for people under 40 years old. For example, a 30 year old with good health can find a policy for less than $300 a YEAR for $500,000 in protection. This should more than cover anyone around that age.

Another form of a term policy is offered to many of to help offset some of our credit risks. For example, have you received an offer that if you pass away, your mortgage will be paid off? This is generally what is known as a decreasing term policy. Mortgage companies market this to their clients that covers the unpaid portion of the debt to them. Before purchasing one of these types of policies (often offered along with car loans, credit cards, etc as well) do your research! You can easily find out how much a policy will cost by clicking one the links on this page.

Scott Cote is software and business profession in the Life and Health Insurance industry. You can find him at his website at http://www.wealthbounce.com

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All types of Life Insurance fall into one of the four groups explained below, which type you use depends on the type of risk you wish to protect and the funds you have available.

Term Assurance

Cash lump sum paid out in the event of death

Straight term assurance is still a very cost-effective way of providing financial protection for the family or business. A lump sum is normally provided when a claim is made which is paid into the estate of the policyholder.

In order to avoid complications with delays in probate or inheritance tax, an appropriate trust can be used so that any payment is made direct to the beneficiaries.

It is also possible to have the cover indexed according to inflation, so that the level of cover remains the same in real terms. Since there is no element of saving, the plans do not acquire a surrender value. If you wish to include this option, you could opt for convertible term assurance.

Family Income Benefit

A regular income paid following death during the term of the plan

This type of plan provides for a regular income to be paid out in the event of the death of the life assured during the term of the policy. With each month that passes, the liability which the insurance companies is taking on decreases by a set amount. This enables the costs to be kept down to a minimum and is often the least expensive plan available.

The benefits can be written in trust to avoid legal delays and any possible
liability to inheritance tax.

Mortgage Protection.

This type of plan is also a term policy which covers the declining balance of a repayment mortgage. This enables the cost to be kept to a minimum but make sure that the interest rate figure is high enough for any possible increases in the mortgage rate.

Whole of Life Cover

Provides cover for the rest of your life

The main disadvantage of term cover is that at the end of the term, cover ceases and any new policy has to be underwritten according to the age and health of the policyholder at that time. When a whole of life policy is taken out, the policyholder has guaranteed insurability for the rest of their lives, regardless of any change in their health.

This means that initial premiums are likely to be higher than term assurance cover, but the plan has far more flexibility. It therefore depends on your personal circumstances as to which plan is likely to best suit your requirements.

Critical Illness Cover

Cash lump sum for those who die or have a critical illness

In recent years, the need for protection for those who actually survive serious illness or accident has become more apparent. It has been described as ‘life cover for the living’.

Most plans cover the common conditions such as heart attack, stroke and most forms of cancer, but there is variation on more rare conditions. In addition to specific illnesses, it is quite common to have permanent disability cover. If you become permanently disabled and unable to return to work, the plan pays out. There is however, a wide variation in the definition of ‘return to work. Some plans would only cover you if you were totally unable to work. Others have an own occupation? clause so that if you were unable to return to your normal occupation, a claim could be made. This is an extremely important fact to bear in mind when selecting your insurer.

For a one stop information center about life insurance go to http://www.aboutlifeinsurance.info

You may reproduce this article provided you maintain an active link back to
http://www.aboutlifeinsurance.info

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