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Life insurance is one of the most useful products sold by financial firms. The concept is very simple, but the large numbers of derivative products that have flooded the market make it hard to find a suitable one. To do so, one has to get the answers to some important questions. What types of policies are available, how much cover is needed, and what will be the premium?
Not to mention the bigger question of the life insurance quotes, and where to get them from. If someone interested in getting insured has the trusted counsel of a broker or advisor, it makes things easy. Otherwise, people often end up trusting the agent who is selling them the policy. A middle of the road solution is to find out more using an online resource.
Types: The two basic types are either protection policies or investment policies. The protection policy that is most commonly purchased is called term assurance. It simply provides coverage for a specified amount and time period.
The insured (buyer) decides the type of policy and its amount and term, and the insurer responds with quotes detailing the premium that has to be paid. In case of the insured's death while the contract is still in force, the insurer will have to pay out the amount covered. These policies do not have a cash value, and are not investment vehicles.
Those who need protection and investment growth should instead opt for a permanent policy type such as whole life insurance, which offers lifetime protection. It only needs level premiums that add to the policy's cash value. Earnings accrue in the account and add to its growth.
Also note that the insured has complete access to the amount currently accrued in the account. They can borrow against it or even withdraw funds. The amount in the account and all earnings are usually allowed to grow tax-deferred. Beneficiaries could also be given the amount without having to pay income tax on it.
Another variation on this type of policy is a limited pay policy. In this case, the insured can stop paying the premium after a prespecified period like 10, 15 or maybe 20 years. But the cover still remains active after the premiums are no longer required. These and other variations on the basic policy types determine the premium and rates offered by the insurer.
Calculator: Use an online life insurance calculator to decide the exact amount of coverage needed. The calculator will ask a series of questions, including invested assets and living expenses, college funds, mortgages, car loans, etc. The calculator then provides the amount of coverage required under the circumstances.
Quotes: Getting life insurance quotes from different insurers is perhaps the most crucial part of this whole exercise. It can be done online, simply by filling in the details on a form. The buyer now has a fair idea of how much coverage is needed and how big the premium will have to be to provide this cover for specific policy types. The question is merely of finding the best company offering a matching policy.
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