What Is Life Insurance? 3 Popular Types You Should Be Aware Of
When a person suddenly passes away it is one of the most devastating things you will ever have to handle. Not just from an emotional point of view, but from a financial one also. You need to deal with funeral expenses, medical expenses and if the one who passed away was the bread winner, you will now have to learn ways to live on just one income.
That is why possessing life insurance is crucial. Life insurance is simply a contract between you and a insurance company. And the reason for it is to make sure that your family will continue to be taken care of when you are no longer here. Every month you will pay a premium to the life insurance company that you have chosen. In the event of your death the insurance company will pay out a death benefit.
A death benefit is a one time, lump sum payment that is going to be paid out to your named beneficiary. In most cases you will select life insurance according to your requirements and desired goals. There are three standard types of life insurance that you need to understand. Term life, whole life and universal life. Term life insurance only protects you for a specific period of time.
Whole life and universal life are both long term insurances and they protect you for your lifetime. A very important factor to remember is that death benefits are generally tax free. Let’s briefly examine the three basic types of life insurance a little more.
Term life insurance will provide you with protection for a certain length of time. Typically its between 10 and 20 years. Your premiums will almost certainly be fixed and you are guaranteed protection for the specified period of time. After the term has ended you could possibly have the option to continue your protection. In most cases, if you continue your protection it will be at an increased premium.
Generally speaking term life is cheaper: try Pioneer life insurance. The majority of people use term life insurance to cover lost potential income. Keep in mind that life insurance benefits are paid out in one lump sum and not monthly income.
Universal life insurance however is permanent life insurance. The best part about universal life insurance is that your policy is flexible. You have the capacity to increase or reduce your premium or protection throughout your lifetime. You do not have this option with whole life.
Universal life also offers a tax deferred savings element that can enable you to build wealth as time passes. Since universal life is lifetime coverage, your premiums will be greater than a term life policy. Generally people use universal life insurance to assist with estate planning. It is a good kind of insurance for those who would like to protect the money that is to be transferred to their heirs.
Last on the list is whole life insurance. Whole life is also permanent lifetime protection. Your premiums are normally fixed which usually means you do not have the flexibility to adjust them like you would with universal life insurance. Whole life also has a cash value aspect that can accumulate tax deferred over time.
This is considered one of the primary reasons people opt for whole life. It can assist them to build up tax deferred savings over their lifetime. And similar to universal life, whole life can also be utilized to assist with estate planning.
Just How Much Will You Pay For Life Insurance Cebu? Insurance providers will typically use rate classes to figure out just how much your monthly premium is going to be. Please be aware that these rate classes will not have an impact on the duration of your coverage or the amount of money it pays out. It only influences what amount you will pay in monthly premiums.
Here is how the rates are categorized:
Standard Rate This rate is for people that are in good health. This usually means your cholesterol levels are typical and you have a low risk lifestyle.
Preferred Rate This rate is for those people who are in very good health. You have a good family medical history, your cholesterol levels are low and you live a low risk lifestyle.
Super Preferred Rate This is reserved for those people who are in excellent health. You also will need to have a good family medical history along with low cholesterol levels and a low risk lifestyle.
There are several different elements that go into deciding your rate class. Some of them consist of your overall health, your family medical history, your lifestyle, whether or not you are a smoker and much more. If you are a tobacco user you can assume your premiums to be higher than somebody who does not smoke. Simply because when you smoke you put yourself at risk for all kinds of health issues.
You are viewed as a greater risk and would for that reason have to pay a higher premium. By simply stopping smoking you could reduce your premiums by a few hundred dollars a year.