Life insurance
is a contract between an insurance policy holder and an insurer or
assurer, where the insurer promises to pay a designated beneficiary a
sum of money upon the death of an insured person.
Depending on the contract, other events such as terminal illness or critical illness can also trigger payment.
What Is Life Insurance? Life insurance is a contract between you and an insurance company.
Essentially, in exchange for your premium payments, the insurance
company will pay a lump sum known as a death benefit to your
beneficiaries after your death.
Your beneficiaries can use the money for whatever purpose they choose.
Best Life insurance companies Of 2021
- Best Overall: Prudential.l
- Best Instant Issue: State Farm
- Best Value: Transamerica
- Best Whole Life: Northwestern Mutual
- Best Term Policies: New York Life
- Best for No Medical Exams: Mutual of Omaha
- Best for Military: USAA
Benefits of whole life insurance to term life insurance?
Whole life provides many benefits compared to a term life policy:
It is permanent, it has a cash value investment component, and it
provides more ways to protect your family’s finances over the long term.
Most insurance companies say a reasonable amount for life insurance is 6-10 times the amount of annual salary.
Another way to calculate the amount of life insurance needed is to multiply your annual salary by the number of years left until retirement.
Why Life insurance is important:
Life insurance is important, as it protects your family and lets you leave them a non-taxable amount at the time of death.
It is also used to cover your mortgage and your personal loans, such as your car loan. Your individual life insurance follows you when you retire and you are no longer insured by your employer.
Who is eligible for life insurance pay?
If you die the insurance company pays your family, or whoever you
named as the beneficiaries, the amount of money specified in the policy
Like the lottery, there’s a choice to receive the money all at once or
in installments. Unlike the lottery, this is an investment that actually
pays off.
Uses for Life Insurance Benefits:
- Paying final costs. Life insurance policy benefits can be used to help pay for final expenses after you pass away…
- Paying off debt or replacing income…
- Inheritance…
- Paying federal or state estate taxes…
- Charitable contributions…
- Protection for you and your family…
- Reduce stress during difficult times…
- To enjoy financial security…
- Peace of mind…
- A legacy to leave behind…
Importance of life insurance:
Life Insurance products provide a definite amount of money in case the life insured dies during the term of the policy or becomes disabled on account of an accident.
Life Insurance is needed:
To ensure that your immediate family has some financial support in the event of your demise.
Whole life insurance:
Whole life insurance, also known as “straight life” or “ordinary life,” is a life insurance policy which is guaranteed to remain in force for the insured’s entire lifetime, provided required premiums are paid, or to the maturity date
Types of whole life insurance
Whole life or permanent insurance pays a death benefit whenever you die—even if you live to 100!
There are three major types of whole life or permanent life insurance—traditional whole life, universal life, and variable universal life, and there are variations within each type.
Best life insurance company:
- AXA equitable
- Northwestern mutual
- Ohio national
- Guardian
- Massachusetts mutual
How Does Whole Life Insurance Work?
Whole life insurance is one of the oldest forms of life insurance.
For most people in the 19s century, it was the most common form of life
insurance in the United States.
Whole life insurance continues to be popular and represented 33% of the total life insurance in the fourth quarter of 2019.
Whole life insurance policies are intended to cover you for your entire life. The policies feature guaranteed premiums, guaranteed cash values and guaranteed death
Dividends are common on whole life insurance policies. “Participating” whole life insurance policies pay a dividend and are offered by mutual insurance companies.
Non-participating whole life insurance policies do not pay a dividend and are offered by stock insurance companies.
You’ll typically have a choice of how to use your dividends. Common options include:
- Taking the dividend as cash
- Putting it toward premiums
- Purchasing paid-up additions
- Purchasing paid-up additions will increase the cash value and death benefit. If you have a policy loan, dividends can be used to pay loan interest and to pay back the loan. Insurance companies may offer other dividend options.
Non-participating whole life insurance policies issued by a stock life insurance company may earn interest on the cash value.
Whole life insurance policies could include a limited payment period
option. These policies will have a higher premium but you’ll pay for a
shorter time.
Whole life insurance is a financial flashpoint. Almost everyone in the personal finance world has an opinion about it.
So choose wisely…
Thank you
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