Sunday 24 April 2011

Life Insurance Policy

Most individuals buy life insurance policies to secure the future of their dependents in case of their end, whether premature, accidental, or due to sickness. Life insurance offers a certain guarantee of financial safety for the dependents in the event of the policy buyer's demise.

The dependents of the policyholders are given this amount if the premiums have been given in instant. However, in modern times life insurance can be used as a savings option, as a security for loans and for other requirements as well. A life insurance policy purchased discreetly with due caution can be modulated to attend to the different needs of a policyholder.

Life insurance has become important in a world where social security benefits, pension plans, and family savings become insufficient to answer the financial requirement of the entire family, cover health costs or to keep a certain life style, in case of the demise of the breadwinner.

There are various insurance plans that offer policies to sick individuals who are unable to get insurance wherever else, although the premiums are high. Insurance companies generally hesitate to insure individuals with high humanity risks. Smokers, diabetics or fat individuals are frequently insured with double or triple the premiums paid by non-smokers or non-diabetics.

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The most important kinds of insurance policies are term life insurance and permanent life insurance. There are various variations within these. A term life insurance policy provides death insurance for a specified period. The primary premiums are very low but get more expensive with each passing year, and in the long run they come to be more expensive. These are usually suitable for young people with short-term requirements like a house loan, a car loan, or educational funding.

The recipient amount is given only in case of death of the policyholder in that particular period. The renewal of term policies or conversion to stable is more expensive.

There are no dividends or cash values gained through this policy, which is simply protection-oriented. Whole life insurance provides safety. Initial premiums are substantially higher than the actual price of the insurance, but the premium is afterward on much lower than for term life insurance. The initial high premiums are used to level out the premium later, and applied to cover the whole life.

Whole life insurance offers dividends and cash values on maturity. Donation insurance is a variation of term insurance that can be used for purpose of saving, or getting extra income during retirement. Universal life insurance is a derivative of whole life insurance where the buyer has the suppleness to choose the kind of premium.

Variable life insurance is popular because the premium money is invested in various funds so that it has a potential to reap dividends. Variable universal life insurance accommodates the advantages of both the universal and variable life insurance. Single-purchase life insurance enables an individual to buy the policy at once. Survivorship life insurance is done together by two individuals.

There are various kinds of other insurance plans with several variations offered by different companies. Apart from consulting experts in securing the best policy suiting your single needs, one should weigh the options; consider the kind of coverage required or insurance needed the aptitude to pay premiums, and the duration of the requirement.

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