Of all the different types of policies, universal life insurance seems to be the most favorite among today’s policyholders. It is a much later innovation, conceived to meet a modern need. However, it does not mean that the earlier policies have all become redundant. No, even term life, the original life insurance policy, has quite a big following even today and so have the whole life policies. Nonetheless, people seem to prefer universal life because it combines the low-cost protection of the term life with the saving elements of a whole life to provide a perfect solution to modern insurance needs.
I am sure you are aware that the term life is the original type of insurance policy. Indeed, life insurance may have actually started in the form of burial clubs and artisans’ guilds in the Middle Ages, but the term insurance that we know of today is a much-refined version. It is a pure life insurance policy valid for a temporary period only. You can buy one for a period of 1/5/10/15/20/25/30 years. Since these policies do not accrue any cash value, you can have a large coverage at a very reasonable rate.
However, on the con side, unless you die within the valid period, the term insurance policies offer no return. The whole life policies were next conceived as its antidote. They had the saving element incorporated in them. However, such policies were a little too expensive and the premium payment mode was a little too rigid. The universal policies came next. It became an instant hit because it offered more flexibility when it comes to cost and coverage.
Indeed, if you want to take advantage of the market without losing the security of the life policy, there can be nothing better than universal life. The following are some of its salient points:
• It is a permanent policy valid for the life of the insured and so whenever the insured dies, his beneficiary is sure to get the benefit.
• These policies are slightly overpriced and the amount paid above the cost of insurance is credited to a cash value account.
• Interest too is credited to the account. It may either be determined by the insurer or pegged to financial indexes such as stock, bond, etc.
• If you fail to pay the premium, the amount will be debited from this account, thus keeping the policy in force in spite of occasional lapses.
Today we also have variable universal insurance, which allows the cash value to be directed to a number of separate accounts that operate like a mutual fund. However, since these policies are equity-based, they can offer a higher return, but if the market goes down, they offer greater risk too. If you are buying the policy solely for insurance purposes, such a policy may not be a very good idea because the death benefit will be paid as long as you have enough cash value to pay the costs of insurance in the policy.
However, it is not for me to tell you what type of policy to buy. Receive different categories of life insurance quote online and then decide. All said and done, I cannot stop myself from adding that, for life insurance purposes, you will do well if you buy only a term life insurance. It is true that term life does not offer cash value, but its rates are so low that only a financial fool will expect it from the policy. Instead, the financial advisers say that one should buy a low-cost term life for insurance purposes and then invest the difference in a separate fund.
However, not every type of term insurance is cheap. The term life insurance no medical exam policy for example is so expensive that the concept of investing the difference cannot be applicable here; in fact, the price structure of such a policy does not leave any difference to invest. Sometimes they are as expensive as a universal life policy is. Yet, such policies are no less popular because they too have some unique advantages.
No medical policies provide instant coverage. You apply today and if you qualify, your family will start being covered by the policy from tomorrow and that too for the full amount. Of course, just like every other case, suicide within the first two years is always excluder from its purview; otherwise, every other type of death in included under this policy. You may wonder why this policy is so expensive. Actually, without the medical test, the carriers can never work out the exact cost of insurance and so they charge more. Remember, they are here to do business, not for charity.
Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on term life insurance rates and life insurance no medical, visit his site today.
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