Saturday, January 05, 2008

Life Insurance Policies

By John Dale

Negotiating the life insurance jungle can be a nightmare. It doesn't have to be and though there may be a raft of new ideas and terms to come to grips with, you need to remember you have to get this decision right for your loved ones as by the time you claim, you will be gone and cannot come back to correct any mistakes.

The two important insurance policies are term life insurance and whole life insurance in the market. Variable life insurance and universal life insurance is not much common in market.

Whole of life insurance policies offers a benefit to the life insurance policy holder through investment fund, which are increased over time. The two levels that are reviewed at regular interval of time during in type of insurance policies are premiums and cover. This is important as when the cover level cannot be sustained by the premiums which are being charged by the company then the investment fund collected during the few past years is used to append the cost of cover and thus the protection is maintained till death of policy holder.

Whole of life insurance policies are long lasting and thus the longest type of contract. The flexibility and commonly used for protecting of estate from the effect of the inheritance taxed that are charged on death of policy holder.

As the name indicates, term life insurance policy remains valid for some term period. In this policy there is no investment required and the premium charges tend to be very cheaper as compared to whole life insurance policies. The premium money is needed to buy life coverage and when the term policy expires no money will be returned to policy holder of term insurance.

Typically, term life insurance policies are used to insure mortgages which last a known length of time so the term can easily be calculated. They also are often used for young families who have a desperate need for financial protection but are subjected to very tight budgetary constraints.

Variable universal life insurance policies combine an investment element with life insurance and to this end they are similar in nature to whole of life policies. They are flexible in receiving premiums both in terms of when and how much.

Variable universal life insurance policy is similar to investment case i.e. it is almost like a portion of investment in coverage of your life insurance policies. Since this is a type if life insurance policies it gains benefits from eye-catching taxation benefits that are considered odd to the insurance policies. As this type of policy is flexible in receiving the premiums i.e. how much to receive and when to receive, it allows the usage of this policy to protect capital gains which else can be charged taxes within them.

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