Life Insurance Basics

benefits paid by life insurance are tax terms

The term life insurance applies broadly to all policies involving the payment of death benefits to named beneficiaries. In general terms, it also covers risks such as loss of life, sickness and disability. Benefits paid under life insurance are tax-exempt. There are different types of life insurance policies including term, endowment, whole life and variable universal life policies.

Endowment life policies are purchased from banks and are most commonly used for saving and investment purposes. The main benefits of endowment life insurance are that there are no restrictions on the amount of cash returns that can be made by the policy holders and that they can borrow from the policy. Another important feature of endowment life policies is that they are accessed Sept. 15 for the purpose of making tax-free investments. These investments are done through certificates or other securities issued under the laws of dissolving corporations.

Variable universal life policies from a bank or an insurance company

A variable universal life insurance policy can be made up of one or more policy lines. Each line of a variable universal life insurance policy remains in effect until the policyholder ceases to make payments under the plan. Premiums can be paid according to the policyholder’s age, the state in which he resides or his health at the time of application. In addition, some insurance companies offer additional features such as the option to convert an existing variable universal life insurance policy into a decreasing term life insurance policy.

Whole life insurance policies are generally the most costly types of life insurance policies. The coverage provided by whole life insurance policies lasts until the policyholder passes away. If the policyholder outlives his policy then his beneficiaries receive the remaining value of the policy. Some of the characteristics of whole life insurance policies include having fixed premiums, graduated payments and the provision of dividends.

purchasing a life insurance policy is very important nowadays

Endowment life insurance policies are also popular as they provide flexible options for the premium. Unlike other types of life insurance policies, endowment policies do not restrict the number of payouts. Also, endowment policies do not require the purchase of an endowment bond. However, endowment policies cost more than standard life insurance policies because of their higher rates of interest.

One should always consider all the aspects while purchasing a life insurance policy before purchasing. It is possible to find a cheap and effective life insurance policy if you know where to look and how to compare the different options available. You should also check the rating of the insurance company you plan to buy the policy from. The best way to get your desired life insurance company is to search on the Internet to find a reliable and reputable online life insurance company with years of experience.

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