There
are several types of permanent insurance:
1. Whole life or ordinary life is the most common type of permanent
insurance. The premiums generally remain constant over the life of the
policy and must be paid periodically in the amount indicated in the
policy.
2. Adjustable life insurance
premiums are recalculated at set time periods, typically every five,
or even ten, years, to reflect current interest rates. While five years
is the most common readjustment period, some policies may be based on
three or even ten years.
3. Universal life allows
you, after your initial payment, to pay premiums at any time, in virtually
any amount, subject to certain minimums and maximums. You also can reduce
or increase the death benefit more easily than under a traditional whole
life policy. (To increase your death benefit, the insurance company
usually requires you to furnish satisfactory evidence of your continued
good health.)
Advantages:
- As long as the premiums are paid,
protection is guaranteed for life.
- Premium costs can be fixed or flexible
to meet personal financial needs.
- The policy accumulates a cash value
against which you can borrow. (Loans must be paid back with interest or your beneficiaries will receive a reduced
death benefit.) You can borrow against the policy’s cash value
to pay premiums or use the cash value to provide paid-up insurance.
- The policy’s cash value can
be surrendered, in total or in part, for cash or converted into
an annuity. (An annuity is an insurance product that provides an
income for a person’s lifetime or a specific period.)
- A provision or rider can be added
to a policy that gives you the option to purchase additional insurance
without taking a medical exam or having to furnish evidence of insurability.
Disadvantages:
- Required premium levels may make
it hard to buy enough protection.
- It may be more costly than term
insurance if you don’t keep it long enough. The first step
in obtaining Life insurance is that to contact a agent. The agent
should be able to provide information and advice on coverage options
and cost-saving measures. Agents should be familiar with insurance
companies in your city or state. You have to check whether the agent
is a full-time and experienced agent or one who sells insurance
as a sideline, and look for an agent with specialized training in
life insurance. Confirm the agent has any professional designations.
Also feel free to ask your doubts and get clarified with it.
Few tips to keep
in your mind about your insurance purchase:
- Take your time. On the other hand,
don’t put off an important decision that would provide protection
for your family. Make sure you fully understand any policy you are
considering and that you are comfortable with the company, agent,
and product.
- When you purchase a policy, make
your check payable to the insurance company, not to the agent. Be
sure to get a receipt. After you have purchased an insurance policy,
keep in mind that you may have a free-look period, usually 10 days
after you receive the policy, during which you can change your mind.
During that period, read your policy carefully. If you decide not
to keep it, the company will cancel the policy and give you an appropriate
refund.
- Review the copy of your application
contained in your policy. Promptly notify your agent or company
of any errors or missing information.
- If an agent or company contacts you
and wants you to cancel your current policy to buy a new one,
contact your original agent or company before making a decision.
Surrendering your policy to buy another could be very costly.
- If you have a complaint about your
insurance agent or company, contact the customer service division
of your insurance company. If you are still dissatisfied, contact
your state's or province's insurance department. Most departments
have a consumer affairs division that can offer help, and some have
a toll-free number to respond to consumer requests.
- Review your policy periodically or
when your situation changes to be sure your coverage is adequate.
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