Compare Life Insurance Quotes
During the turn of the twenty-first century, nearly
$21.3 trillion dollars of life insurance was in force
within the United States. Assets of more than nine
hundred United States
life insurance companies totaled close
to $3.1 trillion dollars. The major types of life
policies include term, whole life, and universal life.
The simplest of these contracts is term life
insurance. The policy is designed to be issued for a set
number of years. The protection under these policies
expires at the end of a specified period and no cash
value remains upon expiration of the contract.
Whole life contracts run for the entirety of the
insured life with the gradual accumulation of a cash
value. The cash value of the contract is less than the
face value of the policy and is paid to a policy holder
when the contract reaches maturity or is surrendered.
Universal life policies are relatively new. The
contract was introduced into the United States in
1979. The policy has become a major class of life
insurance. The contract allows the insured the
flexibility to decide the size of the premium and amount
of benefits within the policy.
The insurer charges (the insured) each month for
general expenses and mortality costs, crediting the
amount of interest earned to the insured. There are two
types of universal life contracts: Type A and Type B. In
Type A policies, the (death) benefit is a set amount,
and in Type B policies, the (death) benefit is a set
amount plus any cash value that has accumulated within
the policy.
Life insurance may be classified in accordance with
type of customer. The classifications include: ordinary,
group, industrial and credit.
Best Life Insurance Quote Comparison for Affordable
Whole, Term, Universal and Variable Rates
The ordinary life insurance market includes customers
of whole life products, term life policies, and
universal contracts. The market is made up primarily of
individual purchasers of annual based premium
insurance.The group insurance market is mainly comprised
of employers who set up arrangements for group contracts
with the purpose of covering their employees.
The industrial insurance market is made up of
individual contracts sold in small amounts. Premiums are
collected on a weekly or monthly basis from the insured
at their home.
Credit life insurance is normally sold on an
individual basis, generally as part of an installment
(purchase) contract. The seller is protected for the
balance of any unpaid debt if the insured dies before
the completion of the installment payments.
Insurance may be issued with premiums set up (for
payment) in two different ways. The premium may remain
the same throughout the premium paying period; or the
insurance may be issued with a policy that provides for
a periodic increase in premium relative to the age of
the insured (individual).
Almost all ordinary life policies are issued with a
premium that is the same throughout the payment history
of the policy. This makes it necessary to charge more
than the actual cost of the insurance in the earlier
years of the policy. The necessity of charging more than
true cost is to make up for higher costs down the
road. Therefore, the additional charges in the earliest
years of the contract are not technically overcharges,
but an essential element or part of the total insurance
plan. This establishes the fact that mortality rates
increase with age.
The policyholder does not overpay for protection due
to the claim on accumulated cash values during the early
years of the policy. The policyholder at his or her
discretion may borrow against the cash value of the
policy or totally recapture the value by allowing the
contract to lapse. The insured does not, however, have a
claim on any earnings accrued (over time) by the
insurance company through the investment of funds paid
by its policyholders.
An insurer is able to provide many different types of
policies by combining term life insurance and whole life
insurance. Two examples of package contracts are the
family income policy and the mortgage protection
policy. In each package a primary policy type, generally
whole life is combined with term insurance and
calculated in such a way that the amount of protection
continues to decline during the duration of the policy.
Mortgage protection insurance is designed in order
that the (built-in) decreasing term insurance is
approximate to the amount of mortgage remaining on a
property. In other words, as the mortgage is paid down,
the amount of insurance declines accordingly. The
declining term insurance expires at the end of the
mortgage period, leaving the base policy still in
effect.
In similar fashion, the family income policy provides
decreasing term insurance within the package in order to
provide a specified income to the beneficiary over a
period equivalent to the period of time when the
dependent children are young.
Some whole life policies allow the policyholder to
place a limitation on the period during which the
premiums are to be paid. Examples of this
include: Twenty year life policies; thirty year life
contracts, and life policies paid to age sixty five
(65). The insured initially pays a higher premium in
order to compensate for the limited premium paid in the
future. At the end of the stated paying period, the
policy is declared to be ?paid up,? however policy
remains in effect until death or the policy is
surrendered.
Term life policies are adequate when the need for
protection is for a specified period of time. Whole life
policies make the most sense when the need for
protection is permanent.
The universal life plan earns interest at a rate
approximately equal to rates available on long term
bonds and thus can be used as a convenient savings
plan. In addition, the insured may adjust the death
benefits as needs change. The policy offers the owner
cost savings in the way of commission expense providing
flexibility for the insured by eliminating any necessity
of canceling one policy and purchasing another when the
insured?s requirements change.
In conclusion, life insurance contracts offer many
options for each individual circumstance. Therefore, it
is always best to consult an insurance advisor when
shopping for life products.
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