There Is No Cash Build Up In The Policy

Category: Finance, Insurance.

If you have a spouse or children, you need life insurance.

How would they be able to handle things if some drunk driver ran into you tomorrow and you died? You have heard it before, but it bears repeating. Life insurance is the great safety net against all that life can throw you. Well, let s take some of the mystery out of the more common terms. That being said, it is hard to imagine another area of financial planning that uses such odd terminology. An Adjustable Life Insurance Policy is a popular product. Such flexibility lets you coordinate the policy to your current needs as they change.

As the name suggests, one can adjust the premiums, death benefit and, term time when premiums are paid. An Annual Payment Annuity provides you with simplicity. Of course, you need to make sure yo have cash on hand to do so. As the name suggests, you can pay the entire premium for the year at one time. When you buy an insurance policy, you will be asked to designate a Beneficiary. The Commutation Rights associated with an insurance policy apply to the beneficiary of the policy.

This is the person that you want to receive the funds that will be paid out from the policy on the death of the life insured. Depending on the policy, the beneficiary may elect to convert installment payments to a lump sum payment. The clause designates an adult to handle all elements of the policy until the minor reaches a specified age. An Adult Provision, often referred to as a Control Provision, appears in life insurance policies for a minor. To really understand what you are getting into, you need to grasp the Cost of Insurance. It is a simple calculation with term insurance, but more complex for policies that build up cash.

This is the amount you pay in premiums minus what you get from the policy. The insurance phrase Double Benefit or Double Indemnity refers to a policy that pays out double the stated benefit if the person whose life it is based on passes away in a particular way, such as a car crash. The waiver essentially says that if you become disabled, no further premium payments must be made. A Waiver of Premium clause is something you should try to include in your policy. Coverage, continues, however. Term policies vary in design, but you basically pay a premium for a death benefit.

The most common type of life insurance is Term Insurance. There is no cash build up in the policy. Variable Contracts represent another pillar of the life insurance industry. The policy has a capped term of five, ten or more years. These policies come in the form of annuities or straight life insurance. As with any area of financial planning, there are a vast number of terms used in the life insurance world. Cash builds up in the policy and may be invested in stocks or mutual funds and so on.

If you don t understand a term used by an agent, ask for an explanation. Don t be shy!

Read more...

Critical Illness Can Affect Anyone - Finance and Insurance Articles:

Long ago when someone suffered from a critical illness, his chance to survive could be slight. As a matter of fact, survival rates have considerably increased.