Common Types of Life Insurance Many people in the US right now, have a life insurance policy set into place. But, unlike what most people think, this is not just a fund to help pay for the funeral and arrangements, its for so much more than that. In fact, one of the biggest reasons people get life insurance to begin with is to take care of their loved ones even after they are long gone. If you are interested in the types of life insurance an insurance broker in NJ may offer or your just curious about how these different policies and plans work, look no further than the information below.
Term Life Insurance Term life insurance or term assurance is life insurance that provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires, coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or potentially obtain further coverage with different payments or conditions. If the life insured dies during the term, the death benefit will be paid to the beneficiary. Term insurance is the least expensive way to purchase a substantial death benefit on a coverage amount per premium dollar basis over a specific period of time. Variable Life Insurance Variable universal life insurance (often shortened to VUL) is a type of life insurance that builds a cash value. In a VUL, the cash value can be invested in a wide variety of
separate accounts, similar to mutual funds, and the choice of which of the available separate accounts to use is entirely up to the contract owner. The 'variable' component in the name refers to this ability to invest in separate accounts whose values vary—they vary because they are invested in stock and/or bond markets. The 'universal' component in the name refers to the flexibility the owner has in making premium payments. The premiums can vary from nothing in a given month up to maximums defined by the Internal Revenue Code for life insurance. Whole Life Insurance Whole life insurance, or whole of life assurance (in the Commonwealth of Nations), sometimes called "straight life" or "ordinary life," is a life insurance policy which is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date. Premiums are fixed, based on the age of issue, and usually do not increase with age. The insured party normally pays premiums until death, except for limited pay policies which may be paid-up in 10 years, 20 years, or at age 65. Whole life insurance belongs to the cash value category of life insurance, which also includes universal life, variable life, and endowment policies. Universal Life Insurance Universal life insurance (often shortened to UL) is a type of permanent life insurance, primarily in the United States of America. Under the terms of the policy, the excess of premium payments above the current cost of insurance is credited to the cash value of the policy. The cash value is credited each month with interest, and the policy is debited each month by a cost of insurance (COI) charge, as well as any other policy charges and fees which are drawn from the cash value, even if no premium payment is made that month. Interest credited to the account is determined by the insurer but has a contractual minimum rate (often 2%). When an earnings rate is pegged to a financial index such as a stock, bond or other interest rate index, the policy is an "Indexed Universal Life" contract. If you've ever lost someone and they didn't have life insurance, you were probably stuck
with not only paying for funeral and burial arrangements, but you may have also been stuck with medical and hospital bills, rent, car payments being due and more. If you are the breadwinner and don't have life insurance, you could be putting a lot on your family after you pass. If nothing else, life insurance is sort of a peace of mind scenario to know that even if something happens to you now, tomorrow or down the line your family will be taken care of until they can get back on their feet.