Worried that you want to secure a future for the inevitable? To do this, study the types of policy that exist and the particularities that each one of them has, so check what I mention below.
Term life insurance
Term life insurance or term life insurance or pure life insurance is a type of life insurance that guarantees the enjoyment or payment of an agreed death benefit if the beneficiary dies or dies for some time.
This type of insurance can once its time expire, be renewed again for the same previous period, convert as a coverage policy or end the term of the policy.
Characteristics of term life policies
• These policies are not backed by contemplated extra savings, that is, the value is guaranteed for the amount stipulated therein.
• These types of policies are tax according to the age of the beneficiary, health and life expectancy of a person.
• It has enjoyment only when the owner or beneficiary dies during the time described in the policy.
Term life insurance operation
When purchasing a term life insurance policy, it is the insurance company that determines the premiums based on the value of the policy, as well as other elements related to age, gender, and health.
The insurance companies have the power to request that the interested party of the policy carry out the respective examinations, to evaluate the conditions in which they are, as well as the medications they are taking or their medical history.
You can also survey occupation, hobbies, smoking, hobbies, as well as the family history of the person concerned.
Another interesting aspect to know is concerning what happens if the policyholder dies during the term of the policy, in this case, the insurer will pay the nominal value of the policy to the beneficiaries who are registered in the document or contract.
Generally, this disbursement is not subject to tax payment.
The amount paid to the beneficiaries by the insurer in attention to the coverage of the policy can be taken to cancel any expenses related to the payments to be made for medical care and funerals or any other debt that it may decide to cancel.
If the policy expires before the death of the beneficiary, he, unfortunately, does not obtain the benefit.
Permanent life insurance
Permanent life insurance, whole life insurance, or whole life insurance I term in English, is a type of policy that is responsible for providing coverage of death benefit during the life of the insured, it is known as a traditional policy or common.
That is, this type of coverage in addition to paying a death benefit, can have savings in which the cash value can be accumulated on a tax advantage basis.
Permanent life insurance features
• This type of insurance is valid for the beneficiary for its entire life.
• Policy beneficiaries usually receive payment, as long as the policyholder has kept up with the payment of premiums.
• This pays at the time of the owner’s death and also the savings that may have accumulated, which can be collected by the beneficiaries or invested.
• The policyholder while alive, can make use of the savings, either by withdrawing it permanently or by asking the insurance company for a loan.
How Permanent Life Insurance Works
To understand how this type of insurance works, which has the purpose of granting a death benefit to the beneficiaries of the policy for the punctual payment of premiums canceled promptly.
This policy implies the payment of what is known as Cash Value or Cash Value ”plus the portion of the benefit that will be obtained by it, all these causes said value to increase if the payments are made correctly while it lasts. Having an increase in that value will be ideal for people who enjoy the policy.
By looking bad with the requested loans and not paying them promptly, the cash value is reduced.
Indexed Universal Life Insurance
You will surely want to know what indexed universal life insurance is and what its purpose is, this type of insurance is broken down into several types since it will depend on fixed and even variable-rate models, in which you can choose several capital accounts to invest.
The purpose of this type of insurance is that it will allow the owner to decide the amount of cash value to a fixed account or a stock index account, the policies contain an important variety of indexes, such as the S&P 500.
The advantage of this type of policy is that although they are usually somewhat variable or volatile so to speak, they tend to be less risky than those that are variable.
Indexed Life Insurance Features
They offer tax-deferred cash accumulation for retirement, in turn, to be able to maintain a death benefit for the owner.
This type of insurance is not a traditional type of insurance, they are extremely complex insurance or, so to speak, very advanced, which is why it is usually somewhat complicated to explain and of course understand by the interested parties.
How this type of indexed universal life insurance works
The way this type of insurance works is usually as follows:
At the time of hiring a policy, a premium must be paid, a part of it pays the cost according to the life that the insured has, and its rates are usually paid and the rest at its cash value.
The total sum of its cash value is usually paid along with interest-based on the increase in the rate of the stock index.
These indices can be chosen in some cases by the policy owners, this value is usually recorded at the beginning of each month and then compared with the value at the end of the month.
It should be clarified that if the index has a significant increase during the month, the interests will be added to the cash value and the earnings of the index are credited to the value of the policy depending on what is specified in the contract, that is, monthly or even annual.
Advantages of contracting indexed universal life insurance
Let’s know what are the advantages of having insurance of this type:
• Low cost: as the premiums are of lower value, the insured fully assumes the risk.
• Flexibility: only the holder controls the amount that is risked in the indexed accounts and the amounts related to the insured’s death benefit can easily be adjusted.
• Death benefit: this is a benefit that will last a lifetime, it is taxed, neither on the income nor on the death of the insured.
Global life insurance
Global life insurance or whole life insurance, global life insurance, is a type of insurance that offers five types of coverage without the need for medical examinations.
Among the insurance it offers are term life, total, accidental death, mortgage protection, and life insurance for children.
This type of policy offers coverage to the five policies mentioned above without requiring medical examinations.
Advantages of acquiring this type of policy
Among the advantages of resorting to this type of policy can be named:
• No waiting period: there are cases (not to say all insurance companies) that have to wait periods before your coverage becomes effective.
• Coverage without medical examination available: it will not be necessary to undergo a medical examination to purchase your policy, although you will have to submit a series of questions about your health and health history.
• You have a 30-day money-back guarantee: if for any reason you think you are not satisfied within 30 days of registering, you can simply cancel and demand your money back.
Disadvantages of acquiring this type of policy
Unfortunately, this type of insurance has certain disadvantages, such as:
• There is an increase in premiums on some policies.
• Guaranteed issue whole life policies are not available.
• The number of customer complaints is significantly higher than average.
Now that you know the type of life insurance that exists, do not hesitate to consult your insurance company, which is the best for you.
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