Life insurance is an agreement between an individual insurance policyholder and an insurance company or insurer, where in the insured pays an agreed amount of money at the termination of his/her life, in return for a policy called a life insurance policy. Life insurance can either be purchased from the insurer directly or the insured can go through a third party company who handles all the paperwork and provides the insurance cover for the insured.
Whole life insurance covers the insured's whole life, as opposed to a term or a variable life. Variable life policies are normally short-term investments that can earn interest on an annual, monthly or yearly basis. Term life policies are generally used by people when they are in their early twenties, and they are usually used to protect the cash value of a home or a car.
In purchasing whole life insurance, the insured pays a specific amount of premium over a period of time, which is usually for the whole life. The amount of premium will depend on the insured's age, the value of the property and the type of policy. When the insured passes away, then the insurance company will payout the policy amount to the beneficiaries in exchange for the premiums paid. Most insurance companies offer the same kind of whole life coverage, but it is important to make sure that you find one that suits your needs.
There are also two kinds of term life insurance: endowment and universal. Endowment life is typically used by senior citizens who wish to cover their funeral expenses, to invest in annuities, to provide for their children's education, to have a part-time job, etc. Universal life coverage is basically a life insurance policy that provides you with a fixed death benefit, instead of one that changes as the insured grows older. With an endowment life policy, you pay monthly premiums to the insurance company, and as you pass away, the insurance company pays the remainder of the insurance premiums.
Once you purchase a life insurance policy, you need to keep the policy up to date, so that your heirs don't have to pay any tax or penalty. If you should die within the insurance policy's term, the insurance company pays the remainder of the insurance premium to your beneficiaries. The insurance company also takes responsibility for paying your debt, if any, if you should die prematurely. However, you do not have to repay any excess amounts paid out-there is no need to make a lump sum payment to the insurance company if you die sooner than the term of the policy.
People can purchase life insurance to help support their family members during their lifetime, especially children and other loved ones who may be left behind in the event of their death. Some people choose to buy term life insurance policies in order to provide for themselves after their spouse dies or their children are left behind in the event of their death. Many parents choose this type of insurance to help provide for their children's education after they leave school, as well as to pay the cost of their children's college education. Other people may want to purchase life insurance to provide for their spouses' education after they are married, to . . . . . . help provide for their retirement and to provide for their own retirement.