Life Insurance is a legal contract between an insurer and an insurance coveree, in which the insurer promises to make a specified beneficiary a specific amount of cash upon the death of a covered individual. Depending on the agreement, death-in-service benefits may also be paid. Premiums for Life Insurance are generally fixed at a certain rate. However, there are many factors that affect the premium rates of Life Insurance. These may include the health condition or life expectancy of the individual covered, his dependents, death-in-service benefit and the amount of insurance coverage requested.
The advantages of Life Insurance are mainly financial and tax-related. It provides a way of protecting the beneficiaries of a family and their dependents from financial loss due to premature death or failing health. It is also an excellent product for senior citizens. The main types of Life Insurance are variable Life Insurance, permanent life insurance, universal Life Insurance and term life insurance. Permanent Life Insurance and Universal Life Insurance are generally considered the most useful products.
Variable Life Insurance is a combination of both Life Insurance and Critical Illness Insurance. With a variable Life Insurance policy, the premium rate may change depending on a number of factors, which depend on the age, gender, health and occupation of the policyholder. The policyholder has the option of increasing or decreasing the premiums. Premiums are paid either completely by the insurer or through the beneficiaries named in the policy.
Permanent Life Insurance policies are designed to provide coverage for an indefinite period of time. This type of policy has no age limit and thus the premium premiums do not increase with age. However, it does require that the policyholder pays a lump sum at the time of death. The sum, known as the cash surrender value, is equal to the amount of premiums actually paid. This is in contrast to the death benefit, which is the actual cash value of the policy, that is, the amount that the insurer receives in the event of the policyholder’s death within the policy’s term.
One can get additional benefits to their permanent Life Insurance policy by purchasing an optional rider to cover the additional costs. These riders can be added to the policy or provided as part of a bundle of coverage sold by an insurance company. One of the most common rider options available to Life Insurance policyholders is the accelerated death benefit rider. This rider allows the beneficiary to obtain payment, usually up to ten times the amount of the policy’s premium, immediately upon the policyholder’s death. The amount of the accelerated death benefit depends on the age of the policyholder and the amount of coverage provided. If the insured is unmarried and has no dependents, the premium for this rider is usually zero dollars.
The accidental death rider also allows the beneficiary to obtain payment even if there are no life insurance policies outstanding. The accidental death rider can be purchased after the policy has been issued. The cost of the accidental death rider is determined by the age of the insured when he or she was insured and the actual cash surrender value of the Life Insurance policy. If the insured has a dependent child who is under twenty-five years old at the time of his or her death, the insurance company may also provide benefits to his or her dependent children instead of providing a lump sum benefit. To determine the actual cash surrender value of the policy, you must subtract the surrender value of any accumulated premium.
Accidental Death Benefits are intended to cover the cost of funeral expenses and legal fees. Some accidental death benefits allow the beneficiary to use the funds for their own funeral expenses and legal fees. The insurance company will, however, always review the circumstances surrounding the accidental death before providing any funds. The review process begins with a detailed appraisal of the insured’s estate and determines the proper amount of coverage to be given to the beneficiaries.
Life Insurance is designed to provide a means of financial protection for families of those who have passed away. However, many individuals fail to recognize that Life Insurance has a cost. Many people purchase Life Insurance without fully understanding its costs and implications and end up having to pay out of pocket for many of the costs associated with their Life Insurance policies. By purchasing adult children Life Insurance coverage, family members can ensure that they do not need to make an immediate financial sacrifice.