Life Insurance

Life insurance pays the designated beneficiary a sum of money (a "premium") upon the death, or in some events events such as terminal illness or critical illness, of the insured person.

Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer.

These types of contracts tend to fall into two major categories:

Protection policies
Designed to provide a benefit in the event of specified event. A common form of this design is term insurance. The policy does not accumulate cash value. Term is generally considered "pure" insurance, where the premium buys protection in the event of death and nothing else.

Three key factors to be considered in term insurance, the face amount (protection or death benefit), the premium to be paid (cost to the insured), and, the lLength of coverage (term).

Various insurance companies sell term insurance with many different combinations of these three parameters. The face amount can remain constant or decline. The term can be for one or more years. The premium can remain level or increase. Common types of term insurance include Level, Annual Renewable and Mortgage insurance."

Investment policies
The main objective of these policies, usually referred as Permanent life insurances, are to facilitate the growth of capital by regular or single premiums. Common forms are whole life, universal life and variable life policies.  These policies sually cannot be terminated until the policy matures (pays out), unless the owner fails to pay the premium when due, with exceptions that frauds in the application.  Permanent insurance builds a cash value that reduces the amount at risk to the insurance company and thus the insurance expense over time.  The owner can access the money in the cash value by withdrawing money, borrowing the cash value, or surrendering the policy and receiving the surrender value.

The four basic types of permanent insurance are whole life, universal life, limited pay and endowment.

Whole life coverage provides for a level premium, and a cash value table included in the policy guaranteed by the company. The primary advantages of whole life are guaranteed death benefits, guaranteed cash values, fixed and known annual premiums, and mortality and expense charges will not reduce the cash value shown in the policy. The primary disadvantages of whole life are premium inflexibility, and the internal rate of return in the policy may not be competitive with other savings alternatives.

Cash value can be accessed at any time through policy "loans" and are received "income-tax free". Since these loans decrease the death benefit if not paid back, payback is optional. Cash values support the death benefit so only the death benefit is paid out.

Dividends can be utilized in many ways. First, if Paid up additions is elected, dividend cash values will purchase additional death benefit which will increase the death benefit of the policy to the named beneficiary. Another alternative is to opt in for 'reduced premiums' on some policies. This reduces the owed premiums by the unguaranteed dividends amount. A third option allows the owner to take the dividends as they are paid out. (Although some policies provide other/different/less options than these - it depends on the company for some cases)

Universal life coverage provides permanent insurance coverage with greater flexibility in premium payment and the potential for greater growth of cash values.  Universal life insurance addresses the perceived disadvantages of whole life – namely that premiums and death benefit are fixed. With universal life, both the premiums and death benefit are flexible. Except with regards to guaranteed death benefit universal life, this flexibility comes at a price: reduced guarantees.

Limited-pay pays the premiums over a specified period after which no additional premiums are due to keep the policy in force. Common limited pay periods include 10-year, 20-year, and paid-up at age 65.

Endowments are policies in which the cash value built up inside the policy, equals the death benefit (face amount) at a certain age. The age this commences is known as the endowment age. Endowments are considerably more expensive (in terms of annual premiums) than either whole life or universal life because the premium paying period is shortened and the endowment date is earlier.

For more information, please contact us at toll free 1-877-681-3195, or email us at info@intwonins.com.  Or fill out the online quote request form at http://www.intownins.com/request_for_quote.php.