Term life insurance

Life Insurance

Term life insurance is agreement between insured and insurer. The insurer has to pay pre determined money on the death of insured person. The contract may be of other event like critical illness. The policy holder has to pay either regularly premiums or as lump sum.

Many people are not aware of the difference between the insured and policy owner. They both may be different and a same person. For example, if husband buy a policy on his own life then he is both insured and policy owner. But if his wife buys policy on her husband life then she is the policy owner and her husband is insured. The policy owner takes all guarantees to pay the premiums and receives money upon the death of insured.

While purchasing term life insurance policy, many people don’t know the number of types of life insurance. It is wise to know all the variations such as, whole life insurance, mortgage life insurance, universal life insurance and whole life survivorship. Each type has benefits for particular person and particular situations. So you should know all the details of each policy before shopping it.

Whole life insurance: this policy remains in force for the whole life of insured. He has to pay premiums every year into the policy. The whole life insurance has various types like participating, non-participating, indeterminate premium, economic, limited pay and single premium.

Mortgage life insurance: this is policy made to protect a repayment mortgage. If in the meantime the policy holder were to die, the policy pay out a capital sum that is enough to repay the remaining premiums. In face this policy is believed to guard the borrower’s capability to pay back the mortgage.

Universal life insurance: is a type of whole life insurance based on cash value. This policy is very popular form of term life insurance. When the insured does payment above the cost of insurance then this extra cost is credited to the cash value of the policy. Insurer gets interest each month upon the extra payment. The interest cost is determined by insurer on the basis of financial index like stock, bond and other interest rate indexes.

Whole life survivorship: this insurance policy offers life insurance coverage to two people for less than the cost if both people go for separate insurance policies. This is used to insure business partners and married couples and is available in modified term life insurance.

In conclusion before purchasing any policy you should compare all plans available in market. Each insurance company has website where you could apply for quotes and get more information of several plans.

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