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Permanent Life Insurance
Permanent Life Insurance
Universal life insurance is a flexible premium, current assumption, adjustable-death-benefit policy. Similar to traditional policies, universal life pays a death benefit and accumulates cash value. Unlike traditional products, universal life completely separates the protection element from the accumulation element of the policy. Universal life insurance is combination of annual term insurance and a savings element. The amount of cash value will determine usually how long the policy will last or stay enforce. As you get older the term insurance cost goes up, the premium is withdrawn from the cash value. If the cash value is not sufficient to pay the term cost your policy may terminate unless you pay in additional premiums. There are many variations of this product and thorough understanding of these provisions and how the interest is credited are critical for the proper results to happen. This type of insurance does not usually have no forfeiture values. No forfeiture values are the guarantees usually found in Whole Life insurance and give you the ability to pay up the policy and guarantee a benefit with no more payments. On May 2003, I published and article titled. “Widows Die Destitute Because of Loss of Husbands Life Insurance.” It brings the problem of not having guaranteed in your life insurance to the forefront.
Variable Universal Life Insurance is similar to Universal life insurance in that it is made up of a term insurance element and a savings element. The savings element is typically invested into accounts called side funds, which are similar to mutual funds. Many insurance companies hire the same management that manages our mutual funds. This brings the opportunity for greater return on our money, but it also brings the risk of loss. This not only introduces the risk of interest variables to the account, it also adds investment risk. Life insurance is meant to be a protection vehicle, not and investment shelter. Basically, the policy includes an account, called savings or side fund, and the cost of insurance is deducted from that account. If your run out of money, the contract will potentially lapse. Then you lose your coverage and the money you have paid in.
Whole life insurance is life insurance offering protection for the whole of life with proceeds payable at death. Premiums maybe be paid under continuous premium arrangement of on limited payment basis for virtually any desired period of years (e.g., 1, 10, 20 30 or to ages 60 or 65). This type of insurance includes ownership provisions called non forfeiture provisions. Whole life insurance has guarantees that other types of insurance do not. The premium is guaranteed, the cash value is guaranteed, and the death benefit is guaranteed. These guarantees can sometimes provide leverage for other events in life. So, whole life is just what it says, life insurance for the whole life, guaranteed. Many forms of life insurance being sold today are marked as permanent with guarantees. However, other types of life insurance, especially universal life, do not carry the same guarantees as whole life. Many policies have been sold on the common belief that the benefits of life insurance can’t be realized until death. It was never explained that whole life insurance has living values associated with the policy.
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