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1/5/2009
Monday morning
This topic is closed off and you will be taken directly to the website.
Topics taken from open source list. I hope you find this useful.
This site is for our clients only as an information resource.
| Whole life insurance protects you throughout your whole life, i.e., it is
permanent. The insurance is also structured to include some form of
savings or investment feature in addition to the life insurance policy.
Because it is permanent and includes an investment feature, it is much more
expensive than term life for the same amount of coverage. There are many
types of whole life; the differences are mainly in the way your premiums
are invested to build up a cash value. The three basic types are the
traditional whole life, universal life, and variable life, though other
varieties like the variable universal life and interest sensitive whole
life exist. The three basic types are described below. |
| Disadvantages
* It is not permanent
* You may not be able to renew it above a certain age, e.g., above 70
years in some states. However, this may not necessarily be
disadvantageous since you may not need life insurance at that age because
your dependents will most probably have been able to establish on their own
by then. |
| Term Insurance
Term insurance is the purest form of life insurance, consisting only of a
death benefit without the frills. It is for a fixed term varying from
one to 20 years, after which it must be renewed. If you die during the
term, your benefits are paid to your beneficiaries. Term life insurance
premiums are cheaper compared to whole life which makes it possible for you
to afford more coverage with the same amount of premium. |
| The amount of insurance you need depends on a number of factors such as
your mortgage payments, and the cost of education, health care and daily
living expenses of your family. You will also need to consider questions
such as: Is your spouse working? If not, will he or she require job
training to be able to provide enough income for the whole family? Will
your house be sold or retained? What effect will inflation have on your
estate? How many years will your children be living at home? Answers to
these questions will help in determining the amount of insurance you should
buy. Several rules of thumb and formulas are available to use as a guide
in deciding the amount of life insurance coverage you need. One of the
simplest is to take your annual salary, multiply it by 5, and minus the
coverage you already have. |
| Traditional Whole Life, is the original cash-value policy. The insurance
stays in force as long as you pay your premium, i.e., it is permanent. The
premium you pay is fixed and depends on your age when you buy the
insurance. The insurance company will invest your premiums and you can
borrow from the cash value built up if you so wish at a favorable rate of
interest. |
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