Comparing the Various Life Insurance Policies

August 21, 2012

Medical Insurance

Comparing the Various Life Insurance Policies

Comparing the Various Life Insurance Policies

Today, if anyone decides to buy an insurance cover, the moment he steps into the market he will be surrounded with a number of policy agents and companies. Each of them will try to lure you to buy the policy he is selling.

Therefore before one decides to make an investment on a life insurance policy, he will need to figure out his necessities and what are the life insurance policy types that are available in the market. Also, one will have to judge his budget.

Generally speaking, a life insurance policy is a contract that is agreed upon by a life insurance company and the one who is insured. The company will be liable to pay a certain sum of money to the beneficiary who in then will be nominated by the insured. However the payment will be subject to certain terms and conditions depending upon the kind of cover that is signed. The holder of the policy will have to pay a certain sum of money as insurance premiums. One can pay an insurance premium on a recurrent monthly or yearly basis or can pay the whole amount at a single go.

Life insurance policies are needed for those bread-earners who have their families depending upon themselves. It is important that he ensures their future and guarantee a source of money, with the aid of which they will be able to carry on in his absence. The policies will help the family of the deceased to fight the financial odds when he isn’t there. But, one who is not a head of the family will not need to worry about all these.

Insurances policies can be divided on a basic level into three types. They are as follows,

Term life insurance policy

Advantages

  1. The premium amount remains fixed, hence one will know how much he will have to pay
  2. This is a cheap form of life insurance
  3. The premiums remain unchanged
  4. The relation between services offered and the costs is economic.
  5. They are the most affordable form of short term, insurance coverage
  6. One will have to option of not renewing his policy and thereby cancel it, if he wishes to. He might just find a better policy and want to switch over.

Disadvantages

  1. There is a expiry dates of this policies
  2. If one doesn’t pass away within the term of the policy the beneficiary will receive no money.

Whole Life Insurance Policy

Advantages

  1. These insurances cover the whole life of the insurance
  2. One will just have to keep on paying regular premiums and the policy wouldn’t expire
  3. The beneficiary will surely receive the death benefits after the insured passes

Disadvantages

  1. Since, these policies are of high risk factors from the insurer’s perspective; the premium costs decided are higher than term policies.
  2. One will have to pay the premiums at regular intervals. Violation of the premium cycle will mean expiry of the policy.

Return of Premium policy

Advantages

  1. This type has qualities of both term and whole life insurances
  2. Once the insured passes away the return-of-premium death benefit will be surely paid
  3. One who outlives the term of the policy will be liable to receive his full payment back without interests
  4. The return-of-premium policies are obviously costlier than term life policy but are much cheaper when compared to whole life policy. A general return-of-premium will be about 50% more in costs than a term policy.
  5. It is a user-friendly sort of policy.

Disadvantages

  1. There is no added benefit for this policy. One will only get the premiums back and will not be liable to any death benefit. Those who will outlive the term will just get the premiums back.
  2. A single failure in paying the premiums might lead to the cancellation of the policy and in such a case one will receive nothing.

Author’s Bio

Jacob brown has a vast experience in writing articles on insurance and related topics. In this article he has discussed the ways to avail Life Insurance Policies. He suggests his readers to visit Arc-protect.com for further information

 

Comparing the Various Life Insurance Policies

 


This site is for information and support only and NOT a substitute for professional diagnosis and treatment!
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