Types Of Life Insurance Policies – Which Is Right For You?

Term Life by definition is a life insurance policy which provides a stated benefit upon the holder’s death, provided that the death occurs within a certain specified time period. However, the policy does not provide any returns beyond the stated benefit, unlike an insurance policy which allows investors to share in returns from the insurance company’s investment portfolio.

Annually renewable term life.

Historically, a term life rate increased each year as the risk of death became greater. While unpopular, this type of life policy is still available and is commonly referred to as annually renewable term life (ART).

Guaranteed level term life.

Many companies now also offer level term life. This type of insurance policy has premiums that are designed to remain level for a period of 5, 10, 15, 20, 25 or even 30 years. Level term life policies have become extremely popular because they are very inexpensive and can provide relatively long term coverage. But, be careful! Most level term life insurance policies contain a guarantee of level premiums. However some policies don’t provide such guarantees. Without a guarantee, the insurance company can surprise you by raising your life insurance rate, even during the time in which you expected your premiums to remain level. Needless to say, it is important to make sure that you understand the terms of any life insurance policy you are considering.
Return of premium term life insurance

Return of premium term insurance (ROP) is a relatively new type of insurance policy that offers a guaranteed refund of the life insurance premiums at the end of the term period assuming the insured is still living. This type of term life insurance policy is a bit more expensive than regular term life insurance, but the premiums are designed to remain level. These returns of premium term life insurance policies are available in 15, 20, or 30-year term versions. Consumer interest in these plans has continued to grow each year, as they are often significantly less expensive than permanent types of life insurance, yet, like many permanent plans, they still may offer cash surrender values if the insured doesn’t die.

Types of Permanent Life Insurance Policies

A permanent life insurance policy by definition is a policy that provides life insurance coverage throughout the insured’s lifetime ñ the policy never ends as long as the premiums are paid. In addition, a permanent life insurance policy provides a savings element that builds cash value.
Universal Life

Life insurance which combines the low-cost protection of term life with a savings component that is invested in a tax-deferred account, the cash value of which may be available for a loan to the policyholder. Universal life was created to provide more flexibility than whole life by allowing the holder to shift money between the insurance and savings components of the policy. Additionally, the inner workings of the investment process are openly displayed to the holder, whereas details of whole life investments tend to be quite scarce. Premiums, which are variable, are broken down by the insurance company into insurance and savings. Therefore, the holder can adjust the proportions of the policy based on external conditions. If the savings are earning a poor return, they can be used to pay the premiums instead of injecting more money. If the holder remains insurable, more of the premium can be applied to insurance, increasing the death benefit. Unlike with whole life, the cash value investments grow at a variable rate that is adjusted monthly. There is usually a minimum rate of return. These changes to the interest scheme allow the holder to take advantage of rising interest rates. The danger is that falling interest rates may cause premiums to increase and even cause the policy to lapse if interest can no longer pay a portion of the insurance costs.

To age 100 level guaranteed life insurance

This type of life policy offers a guaranteed level premium to age 100, along with a guaranteed level death benefit to age 100. Most often, this is accomplished within a Universal Life policy, with the addition of a feature commonly known as a “no-lapse rider”. Some, but not all, of these plans also include an “extension of maturity” feature, which provides that if the insured lives to age 100, having paid the “no-lapse” premiums each year, the full face amount of coverage will continue on a guaranteed basis at no charge thereafter.

Survivorship or 2nd-to-die life insurance

A survivorship life policy, also called 2nd-to-die life, is a type of coverage that is generally offered either as universal or whole life and pays a death benefit at the later death of two insured individuals, usually a husband and wife. It has become extremely popular with wealthy individuals since the mid-1980’s as a method of discounting their inevitable future estate tax liabilities which can, in effect, confiscate an amount to over half of a family’s entire net worth!

Congress instituted an unlimited marital deduction in 1981. As a result, most individuals arrange their affairs in a manner such that they delay the payment of any estate taxes until the second insured’s death. A “2nd-to-die” life policy allows the insurance company to delay the payment of the death benefit until the second insured’s death, thereby creating the necessary dollars to pay the taxes exactly when they are needed! This coverage is widely used because it is generally much less expensive than individual permanent life coverage on either spouse.

Variable Universal Life

A form of whole life which combines some features of universal life, such as premium and death benefit flexibility, with some features of variable life, such as more investment choices. Variable universal life adds to the flexibility of universal life by allowing the holder to choose among investment vehicles for the savings portion of the account. The differences between this arrangement and investing individually are the tax advantages and fees that accompany the insurance policy.

Whole Life

Insurance which provides coverage for an individual’s whole life, rather than a specified term. A savings component, called cash value or loan value, builds over time and can be used for wealth accumulation. Whole life is the most basic form of cash value insurance. The insurance company essentially makes all of the decisions regarding the policy. Regular premiums both pay insurance costs and cause equity to accrue in a savings account. A fixed death benefit is paid to the beneficiary along with the balance of the savings account. Premiums are fixed throughout the life of the policy even though the breakdown between insurance and savings swings toward the insurance over time. Management fees also eat up a portion of the premiums. The insurance company will invest money primarily in fixed-income securities, meaning that the savings investment will be subject to interest rate and inflation risk.

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Do You Need Commercial Insurance For Your Vehicle?

When it comes to insuring vehicles, individuals usually purchase personal auto insurance, while businesses buy commercial insurance policies. But whether or not you should have commercial auto insurance varies greatly depending on how you use your vehicle. Individuals who engage in certain business-like activities with their car should definitely contact their insurance company to check to see if they need to purchase additional insurance. Additionally, any small business owners who have employees drive vehicles as a part of the job need to look into commercial auto insurance as well.

What Do You Use Your Personal Vehicle For?

Any personal vehicle that is used sometimes for business purposes probably needs commercial vehicle insurance. While it is true that some personal auto insurance policies may cover damage that occurs during business to an extent, you need to check with your insurance provider. Make sure you are dealing with a well-qualified independent insurance agent who understands your needs and has experience in dealing with both commercial auto and personal auto insurance issues. If you are unsure whether or not your policy covers your automobile, your best option is to utilize the wealth of knowledge that your agent holds. Bring your policy to your agent and ask them to review the your policy and coverage with you. Don’t leave your coverage to chance.

If you use your car or truck for any sort of business activity, you should consider purchasing commercial insurance for the vehicle. Do you deliver pizzas or other food with your personal car? What about delivering newspapers? Are you an event photographer that uses your own car to carry equipment? Any catering company, door-to-door consulting service, day care van service, real estate agent, or landscaping and garden service should definitely look into commercial auto insurance policies.

Businesses Need Commercial Insurance

Any vehicle that your business owns, leases, or rents, needs to be covered under commercial vehicle insurance. It’s required in most states to cover any financial responsibility if you or an employee is at fault in an accident. Basically, if you or your employees drive company vehicles or personal vehicles to conduct business, you also will most certainly need commercial vehicle insurance. A benefit of commercial auto policies is that they allow you to list anyone that you employ as a driver, an option you don’t always have with a personal auto policy. This way, any listed employee who needs to drive your vehicle can, without getting into issues that may come up should that person get into an accident.

Truckers in particular need to look into commercial truck insurance. Because trucks are much bigger vehicles and require special training to drive, truckers are held more liable for damages. They need to make sure they’re covered under a commercial policy.

Consider Commercial Auto Insurance

Commercial auto insurance is also needed if you need more liability coverage than a personal insurance policy provides. In general, you’ll need commercial auto insurance if the vehicle is owned by a corporate partnership, used to haul tools or equipment weighing more than 500 pounds, used to make deliveries, or is heavy enough to need state or federal filings. If this applies to your business, or if you use your personal car for any sort of business activity, look into commercial insurance today to protect yourself and your wallet.

Commercial Insurance – A Business Guide

In searching for the right insurance, a business owner may contact any number of companies, either in person, over the phone, or online. Or, they can contact a commercial insurance broker. Commercial insurance brokers not only find the policy that best fits the particular business and its risks, but they will also find the best priced policy. Brokers, unlike agents, do not have a contract with the insurance company to sell that company’s insurance. Instead, they work for the client, or business owner.

One of the quickest and easiest ways to find the best commercial coverage is over the internet. Commercial insurance companies have created some of the most all-encompassing websites on the entire web. When it comes to the amount of information and the ease with which potential customers can resource that information, it is truly amazing. By visiting the websites of some of the larger companies, even if they don’t purchase their policy from them, business owners can get a more comprehensive view of the types of commercial coverage that is available for their particular business. By checking on several different websites, anyone who is seeking commercial insurance quotes will find that they can swiftly and readily locate the best and most competitively priced commercial insurance quote. They should always keep in mind that cheap commercial insurance is not always the best insurance, but using the web certainly makes it easier to find.

There are many kinds of commercial coverage available to many different kinds of businesses. Insurance for commercial operations is separated into two categories: property and casualty. Property insurance will cover possessions that are stolen, damaged, or destroyed by any covered cause listed in the policy. Casualty insurance covers the business’ liability if it is responsible for property damage or bodily injury to a third party as a result of negligence or omission.

Most businesses will not need every kind of coverage that is out there. Perhaps one business has several cars, vans, or trucks that are used each day in its operation. In that case, they would need car commercial insurance. On the other hand, a business might be conducted out of the home and all the work is done on a computer and sent out by way of the internet. A vehicle is not used at all for this business so the car coverage is unnecessary as far as the business is concerned. Even though not all coverage is needed, it is a good idea for the business owner to learn about the different types of coverage that are at hand. In this way, it is possible for them to make wise choices as to what coverage is needed. Also, the business owner can make any changes in coverage that may become necessary as his business flourishes.