Friday, 7 June 2013

Life Insurance A to Z

Life is precious and fun especially at the peak of one’s youth.

In order to keep enjoying life with peace mind long after our youth phase, is by investing on it while you are still youthful and one of the many ways to invest on your precious life is by insuring it, through life insurance.

When the word insurance is mentioned, it raises eyebrows. This reminds people of the constant hustles by insurance sales people that constantly bombard you with sales pitch on taking insurance for everything you have and own.

Most of the time they overwhelm you till you get mad and start avoiding them. Most of them are after making commissions from your policy anyway its part of business the important thing, is the big picture behind the sales pitch especially on life insurance.

What is Life Insurance?

It the policy or a contract that one buys and sold by the insurance company to cover for your life’s unexpected calamity for a period of time.

Proceeds are monetary after a duration of time depending on the number of years you took on your life insurance policy.

One pays a premium, either monthly or lump sum depending on your choice and flexibility plus a beneficiary is included on your policy and these can be you, your spouse, kids, relatives or a trusted friend.

Terms used in Life Insurance

Beneficiary:This is the person named in your policy to receive the monetary proceeds upon the demise of the insured.

Cash Value:This is the available amount in cash for loans accessible through withdrawals though it affects your death benefit.

Face Amount:It is the total amount of money stated for payment in case of death.

Insurability:It is the acceptability of an applicant.

Insured:It is the life or person the life insurance policy is issued to.

Participating policy:It is an insurance policy eligible for dividends payments.

Premiums:These are the regular payments made by the insured to keep the policy in force.

Level Premiums:It is level to which the insured fall into between 5-30 years the level premium is the same after 30 it steadily increases.
Types of Life Insurance

Whole Life

Provides guaranteed entire life coverage. These policies have a guaranteed cash value component that is tax deferred. They have high premium rates compared to the other types of life insurance.

Universal Life

It is a flexible premium that can be easily adjusted depending on the insured need change. It also provides cash value benefits depending on the current interest rates.

Variable Life

It combines protection and savings features with growth of investment funds. Usually it has separate account and general account.

The separate account is comprised of various investment funds like equity fund, bonds and such. The death benefit may fluctuate depending on the performance of the investment account.

Variable Universal Life

It combines the features of universal Life and variable life hence giving the consumer the flexibility of adjusting premiums, death benefits and investment options.

The death benefit value may rise and fall depending on the success of his or her investment options. 

However, it guarantees at least minimum death benefit in case of poor performance on investment options.

Term Life

It is the most common used policy it helps protect beneficiaries against financial loss resulting from your death. It only covers for a maximum period of 30 years.

In addition, it has no cash values and the premiums increase as the policy owner gets older or nears the end of term. 
Importance of Life Insurance

Pays for Expenses

After death bills accumulate, so fast like hospital bills funeral expenses plus other unsettled financial obligations therefore you life insurances can quick shoulder the financial obligations smoothly.

Cash Cow

Depending on the life insurance policy, you bought regular dividends can be a boost to your cash flow.

Source of Leverage

In case of sudden need of large sums of money, you can use your life insurance policy to borrow money and surrender the policy.

Shelter from Bankruptcy

Most life insurance policy remains intact despite of your claim to bankruptcy but you need a bankruptcy expert to guide you.

Improves you credit ratings

Life insurance policy is a financial asset to which you can use to apply for a business loan or medical insurance.


In conclusion taking a life insurance is not a simple thing you need to consult from professionals in insurance industry to discuss on which life insurance policy to take that best suits your needs and financial ability.
Here below are recommended books that you can start with before taking a Life insurance policy.

Questions and Answers on Life Insurance: The Life Insurance Toolbook: Author Tony Steuer brings 17 years of experience in the life insurance.

During this time Tony has guided clients with purchasing their life insurance and the ongoing maintenance of policies.

He has also worked with professional advisers on reviewing their client's policies and determining needs. Tony has helped to keep client's, where possible, from unpleasant surprises. Questions and Answers on Life Insurance covers:

  • Life Insurance Needs Planning
  • Keeping your policy in force
  • Company Evaluations
  • Pitfalls to look out for

What Most Life Insurance Agents Won't Tell You

Do you need to buy life insurance? Are you confused about the process and your choices? Look no further.

Let Linas Sudzius, in the book What Most Life Insurance Agents Won't Tell You, give you the inside scoop on the following: ?

The best life insurance policies to buy, ? The best life insurance companies to deal with, ? The right agent to use during the buying process and ?

The kinds of problems life insurance can solve. Linas is a Tennessee lawyer with a long background in the life insurance business.

When he got his professional start, he was confused about life insurance. The more experience he developed, the more he realized that others are confused about life insurance, too.

Read the book that has been 25 years in the making, and get all your questions about life insurance answered.

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