LIFE INSURANCE TERMINOLOGIES | LIFE INSURANCE TERMS SHOULD KNOW

LIFE INSURANCE TERMINOLOGIES FOR NEWBIES

As we all should know insurance have some terminologies that are very necessary in order to understand how you handle or take cover for insurance. Novice can never understand the full dept of insurance without knowing some of these terminologies. What are terminologies “Terminologies are words used in a particular field or subject of study. 

Terminologies is the combination of specific words within a specialized discipline or profession. Every profession has its terms when practicing like the Doctors, Lawyers, and even the insurance companies (Insurers). Terminologies or terms are words or expressions used in the perspective from which the writer, speaker (person) is trying or introducing a particular topic or field.

 Having an idea of what terminologies are, let’s now relate it to our topic of study which now relate it to our topic of study which is “Life Insurance Terms”. Life insurance terms are words used in the insurance world. In much broader explanation, life insurance terms are expressions or words used in relating to life insurance that vividly explains what an insurance expert, insurance company or broker may likely use speaking or carrying out its duties, functions, or responsibilities to a second party who might likely not understand it. Never to worry, the purpose of this article is to widely explain some life insurance terms you ought to know in case you want to opt in for any life insurance policy or just want to have a knowledge of it but first, in any case you don’t have an idea of what insurance is check here “What is Insurance”

Yes, you now understand what insurance is and what we mean by life insurance terms so let’s kick this article rolling by explaining the common life insurance terms you should know about and why you should know them. Thus:

1)    Policy Holder: Who is a policy holder? A policy holder is the person who comes up with the idea of having a life insurance policy and pays the premium. Yea, guess you aren’t confused on what premium is, we shall be discussing that as you read on. the policy holder as rightly said is the person who purchased the life insurance policy and in most cases, this person is not the life assured as the life assured is the third party. 

     For example a policy holder can be a father of three children on a wife then he decides to take up a life insurance cover for his children and name them as his beneficiaries, when he eventually dies, payments based on premium purchased will be paid to the beneficiaries.

2)    The Insured Person: If you noticed, we made mention of life assured, yea, life assured is also referred to as the insured person. The life assured or the insured person is for whom the life insurance policy is expected to cover in case of untimely death. Life assured at most cases is not the policy holder as the life assured is the bread winner. Let’s take for example a man purchases a life insurance cover and pays the premium, he then makes the insurance company to understand that if he dies, his wife should be the beneficiary legally, he has made his wife the “Life Assured”

3)    Nominee:This is the legal heir in which the sum assured and the benefits attached to the premium is been paid by the insurance company when death finally occurred on the policy holder. The policy holder specifically stipulates or nominates who will be paid the sum assured, it could be his wife or children or just a person on all his children. So when he finally dies all payments are made to the nominee without any default by law.

4)    Sum Assured:The sum assured is the amount of money the insurance company will pay to the nominee or the insured person. In other words, sum assured is the amount of money that the insurer (Insurance Company) agrees to pay on death of the insured person. When carrying out a life insurance coverage, there will definitely be a place where you will be asked the amount for purchase of the premium, so it is left for you as the policyholder to choose the amount based on your purchased premium . In technical terms, sum assured is the term used for the total amount that the insurer (insurance company) agrees to pay on death of the insured person (as the case may be)

5   The duration of the policy:  In case of life insurance coverage, it is expected to last for the period of 1-100years or probably a whole life (unto death) but this depends on the type of life insurance plan. When entering an agreement with the insurance company, you should check where the duration period is been stipulated. N normal basis, it is not expected to fall below the age of 80 years.

6    Premium: Premium is the amount the policy holder pays in order to make claims against the policy holder for payments to be made to the nominee peradventure a death occur is known as premium. In other words you need to pay certain amount of money either monthly, quarterly, or whole some to the insurance company will pay certain amounts to the beneficiaries or nominee. Premium differs as policy also differs, the higher your premium the higher the coverage/claims to be made.

7    Rider: What is a rider? In case where there may be addition al cost then coverage’s will be added so in other words a rider is a provision of an insurance policy that amends the coverage or items. Riders help policyholders create insurance products that will meet specific areas of their needs. For example in the case of illness, an accelerated death benefit on a life insurance policy would ensure the insured dies, the beneficiary receives a reduced benefits. Some policy holders have special desires that are not necessarily covered by standard insurance policies. Insurance company offers insurance riders to customize policies by adding similar types of additional coverage. The similar types of additional overage include:

1 hospital cash

2 Premium wavers

3 Cover for critical illness

4 Accidental death benefit Rider

5 Accidental total and permanent disability benefit order

8) Death benefit: This is very common when it comes to life insurance plan. You must have heard about death benefit when trying to purchase life insurance plan or making enquiries on life insurance plan or probably comparing life insurance quotes. Death benefit is what the insurance company pays to the beneficiary or the nominee incase the life assured eventually dies within the duration of the policy. Don’t be confused or rather don’t get it twisted ; you might be wondering if the death and sum assured are similar or different, both death benefit and sum assured are the same but in the case of death benefit you get the sum assured and likely get extra benefits which may include rider benefit that is if there is any.

9    There’s what we call the grace period: Grace period is also called the renewal period. If you were unable to pay the renewal premium for your policy before it expires, the life insurance company gives the policyholder certain number of days in other to pay for the renewal premium. The premium renewal is usually an estimated period of 15 days for a monthly premium and 30 days for an annual premium of which if the policyholder could not pay or refused to pay within this grace period, then the policy is forfeited. Some life insurance company may offer more extension period or renewal period above 15 days for monthly and 30 days for yearly period. So you should always try and get notified of the actual periods when such occurs.

10 Surrender Value: This is when the policyholder informs the life insurance company that he/she will no longer be able to carry on with the plan. This is most effective when the policyholder informs the insurance company before the maturity age of the plan. Upon a notification relieved by the insurance company pays a certain amount to the policyholder, this amount paid is called surrender value. So read the terms and conditions of the insurance company most especially the plan you opt in for, okay, let’s say you have read the terms and conditions and the plan you opt in for offers surrender value another thing you should take note of is how much will it be when you opt out of the plan or discontinue with the plan.

11 Paid-up Value: Perhaps you as the policyholder have decided to discontinue the plan by refusing to pay the premium after the grace period. There will be an option offered by the insurance company to convert your policy into what is called reduce paid-up policy. In this policy, the sum insured are payable to the amount of premiums paid. If there are other benefits attached the sum insured payable then these benefits will be attached to the reduced sum insured which is now the paid-up value.

12 Revival Period: This period is quite similar and a little bit different from the grace period. In the grace period, the insurance company offers extensional time for which the policyholder should be able to renew his/her plan after the original time period has expired but the revival period is an additional period after the grace period in which the policyholder decides to continue with the plans, the insurance company will provide an option of re-activating the expired policy. This revival period is not just done anytime the policyholder desires but an interest to continue with the plan must be a specific period after the grace period expires. That period in which the policyholder decides to continue with the plan is called revival period. In order to continue with the lapsed policy, the insurance company will send a request to a team of underwriters (see below for underwriters) for approval and only when such approval is accepted then the policy begins to run again.

13 Underwriters: before any issuance of insurance policy, there are certain team members called underwriters who evaluate the risk involved in insurance. After risk evaluation then it ends with settlement of claim which is the claim process. So before re-instating your lapse policy, these underwriters evaluate your plan and in return inform the insurance company to re-issue the plan to the policyholder.

14 Exclusions: if there are anything not covered by the insurance company based on your plan, it will be well written in the statement of the policy. That is upon buying a life insurance plan; you should read the “Exclusions” section of the plan. “Exclusion means not covered by this plan”, so if certain things written in the exclusion section was what happened, then the insurance company will not pay any benefit. Some things like this are found in the Exclusion section e.g suicide, intentional hazards which later led to death.

15 Tax Benefits: All life insurance premiums are eligible for deductions. It also depends on the legal system of the country. In some countries, tax are not deducted from any payments to the nominee on life insurance policy while in some countries payments are tax deductibles only the benefits are tax free.

16 Claim Process: When a death occurs on the life assured or the life assured dies during the policy period, the nominee or beneficiary needs to make a claim in order to receive the death benefit as mentioned in the policy.

     

   

See More on LIFE INSURANCE HERE

WHY WHOLE LIFE INSURANCE IS THE MOST POPULAR OF INSURANCE POLICY

WHOLE LIFE INSURANCE: THE INSURANCE WITH THE MOST  SECURITY AND FUTURE BENEFITS

Whole life insurance or whole of life assurance is a kind of insurance policy that remains valid throughout the insured’s entire life – time as long as the required premiums are paid or the maturity date. Whole life insurance is a contract that is entered between the insured and the insurer as long as the terms and condition stipulated in the policy are met. 

The insurer’s duty is to pay death benefit of the policy to the policy‘s beneficiary policy usually have a fixed premiums based on the issued age, and usually do not increase with age. The insured party usually have to   pay his or her premium while death unless for a limited pay policies which may be paid up in 10 years, 15 years, 20 years or even 65 years. Whole life insurance includes also to the “cash value” category of life insurance which also belongs to universal life variable life and endowment policies.

Whole life insurance policy is the most popular of life insurance policy because it can guarantee payment to the beneficiaries upon the death of the insured. An interesting part of this policy is that it has the savings portion called the cash value including the death benefit. Making a cash value grow is an essential component of whole life insurance.

CASH VALUE

For a policy holder to build up cash value, he/she can remit payments more than the normal premium. In addition, dividends received can be reinvested into the cash value and earn interest. The essence or advantage of cash value is that it:

1)    It can serve as a source of equity (Asset – liabilities = equity) to the policy holder.

2)   The cash value offers a living benefit to the policy holder (In order to access this, the    policy holder requests a withdrawal of funds or a loan).

3)    The owner can withdraw funds up to the value of total premiums.

 In essence, the cash value increases, it gives the insurer a reduced net amount of risk that is to say “more cash value, less risk involved”. For example, Getbeg insurance company issues a 30,000 life insurance policy to James Rodler, the policy owner and the insured and as time progresses the cash value accumulates to 15,000. Eventually when Mr. James Rodler dies, the insurance company will pay the full death benefit of 30,000. Which eventually means the insurance company will only realize a loss of 15,000 due to the other 15,000 accumulated cash value. “The net amount of risk at issue was 30,000 but the death of the insured Mr. James Rodler was 15,000.

Death benefit of whole life insurance

The benefits at the death of the insured stipulated in the policy contract. Some policies allows for the payments of dividends. The beneficiary(ies) to this policy be held in account and distributed in allotments. And more also, if the insurance policy was sold before the death of the owner, then there nay likely be taxes assessed on the proceeds from that sale.

 In other words, death benefit of a whole life policy is normally the stated face amount where the death benefit will be increased by any accumulated dividend values and/or decreased by any outstanding policy loans. Death benefit of whole life policy is usually paid at the death of the insurer or the maturity age “100” depending on whoever comes first and when such person crosses or goes above the age of 100, it is known as “matured endowment” and therefore the person receives the face amount in cash.

But on research findings, maturity ages have been increased to 120 but also depend on the insurance company.

The whole life insurance can be very useful and attractive because it offers coverage for a very long period of time. This policy covers the personal and family needs and also the business needs and these personal and family needs include:
·        Supplemental retirement income

·        Surviving spouse income

·        Funeral expenses and

·        Estate planning

The disadvantage about this policy as rightly said is because it is relatively high on premiums when insuring:

•  Growing families with large needs and less source income
• ·Large debts
• 
  
• Temporary needs such as years in which children depends to meet the daily needs
• 
  
• The business needs include:
• 
  
• Finding of buy-sell agreements
• 
  
• Death of key person
• 
  
• Deferred compensation
• 
  
• The supplemental executive retirement plans (the E.S.R.P)
•  

TYPES OF WHOLE LIFE INSURANCE

There are different types of whole life insurance, in order to find the one good enough for you and meet your needs, you have to careful look at the laid down policy or statements in the policy and choose the one best suits you and they are as follows:

1. ·        Participating whole life insurance
2. ·        Non-participating whole life insurance
3. ·        Economic (whole Life Economic)
4. ·        Single premium whole life insurance
5. ·        Indeterminate premium whole life insurance
6. ·        Interest sensitive whole life insurance
7. ·        Level premium whole life insurance
8. ·        Limited payment

Participating Whole Life Insurance: This offers the policy holder an opportunity to have an increase cash value from the policy because the policy holder is eligible for dividend payments from the insurance company. If the insurance company account performs well, the participating whole insurance account will additional cash payments as a result of increase. But this policy usually have a higher cost due to the additional cash payments.

·     Non-Participating Whole Life Insurance:This policy is usually simple and low in cost, it involves a fixed death benefit, level premiums, and a guaranteed cash value over the policyholder’s life. In other words, non-participating whole life insurance means the policy holder does not participate in the investment activities of the insurance company. This company. This policy is a low risk proposition for policy holders which definitely means little potential for growth.

·     Economic Whole Life Insurance:In this type of whole life insurance plan, the policy holder receives additional death benefit as time goes by. But when the insurance company’s investment do not perform well due to economic melt-down, the policy holders death benefit might actually go down with it not necessarily within that period of economic instability

·     Single Premium:In this plan, the policy holder pays up front the total amount of the policy premium. This plan is mostly needed for investment purpose since the buyers need to have relatively large amount of money at hand in order to make the single payments. But one disadvantage with this plan is that these policy holders have significant fees they have to pay if the eventually decides to jettison their policies during the first few years.

·     Indeterminate premium: This plan allows for policy holders to pay a variable amount which depends on the company’s financial performance instead of making the same premium payment every month.

      Interest Sensitive: In this plan, the interest on the policy’s cash value fluctuates according to market conditions. As the insurance company makes profit, you make higher gains and vice versa. The death benefit is constant for life but the premium cannot increase more than what has been stipulated in the policy. This can be advantageous for those who want to secure a “guaranteed death benefit” while looking forward for higher gains in their cash value.

Level Premium: This plan is common and widely accepted, the premium are calculated based on the full duration of the policyholder’s life (up to 95 or 100) and the policyholder pays an equal premium every month or probably his life period. This plan gives the policyholder full stability and assurance in knowing exactly how much he/she will be having on the premium each month and the premiums never increases.
     
      Limited Payment: This is the opposite of the level premium where you would rather have not to pay a monthly premium but a full payment premium in a shorter time frame let’s say 10 or 20 years and this insurance policy is paid off and cannot be voided but one thing about this premium is that is quite higher than level premium plans because of compressed payment schedule. 
           

            Have you read TERM LIFE INSURANCE, READ HERE

TERM LIFE INSURANCE AS ONE OF THE MOST IMPORTANT LIFE INSURANCE POLICY

TERM LIFE INSURANCE AS A TOOL FOR FUTURE SECURITY

LETS BEGIN WITH THE DIFFERENT TYPES OF LIFE INSURANCE

There are different types of life insurance policies, it will depends on your income, needs and duration you want the policy there are basically more than types of life insurance but primarily we have four which most people go for regarding their needs: we have the:

1.     Term life insurance

2.     Whole life insurance

3.     Guaranteed universal life insurance

4.     Accidental death insurance

5.     Guaranteed issue life insurance

6.     Simplified issue life insurance

          The primary four types of life insurance are the:

1.     Term life insurance

2.     Whole life insurance

3.     Guarantee universal life insurance

4.     Equity index life insurance

 TERM LIFE INSURANCE

These types of life insurance usually have a fixed period time let’s say 10 to 30 years. The insurance policy you  take under term life insurance covers you within the time frame or period and expires after his period. The term life insurance is usually less expensive compared to the whole life insurance. 

The specific period of time is the “term” of the policy, once the terms end the life insurance policy will renew on an annual basis most of which allows the owner of the policy to renew until about 90 – 95 years. but one thing you have to be cautions of is that most renewal life insurance policy increases as much as 200% yes, but some increases with a small amount while some many others just keep the premium the same but the face amount decreases. 

Term life insurance or term insurance is a life insurance that is not generally used for estate planning needs or charitable giving strategies but it is used basically for real or pure income replacement needs for an individual. Terms insurance functions in a manner similar to most other types of insurance in that it satisfies claims against what is insured of the premium are up to date and the contract has not terminated and doesn't give for a come back of premium money if no claims square measure filed. 

For example, car insurance will satisfy claims against the home if it is damage or destroyed, may be by fire whether or nit this event will occur is uncertain. If the policy holder discontinues coverage because he or she has sold the insured car or hoe, the insurance company will not refund the full premium.

In term life insurance, it is considered that death has to be  involved in order to get the  benefits, its primary advantage is that it provides coverage of financial responsibilities for the insured or his or her beneficiaries and such responsibilities may include but are not limited to :

1.     Consumer debt

2.     University education for dependents

3.     funeral cost

4.     mortgages

5.     Dependent care e.t.c. 

Having known what “term life insurance” is all about it is now time to also know the different types of term life insurance policies and they include:

1.  Guaranteed level term life is the most common because it is defined by yearly premiums that never increase during the life of the policy. Even though most policies have renew all clauses, these do not guarantee the ability to renew the policy because it depends on the statement issued in the policy. 

They mostly last for 10, 20 or even 30 years and an increase for longer term policies. One thing about this policy is that it is unique as the benefit of year one is the same as in year 30 with the some premium and coverage. This type of life insurance allows users or consumers to know exactly how much they will be paying them and how much will be left behind for a beneficiary. The process of buying a guarantee level term life insurance is no different from that of most other types of term life insurance.

Read more: Best Life Insurance Companies 2019

2.  Annual renewable term life insurance : this types of policy is on shirt term basis because it is been renewed every year for a defined length of time, when the policy is renewed the premium go higher, increase more and more after a period of 20 to 30 years.

3.   Return of premium term life insurance: as the name indicate “ return” this means that there is a refund to life insurance premium when the term period ends, assuming that the person insured is still living, it is much less expensive than a whole life insurance policy and has closed advantages.

4.   Decreasing term life insurance: as the name indicates, the claim becomes lower as the policy ages (become older). The death benefit decrease throughout the period of the plan. it is meant to insure people who currently have greater financial responsibilities that will decrease over time such as a mortgage or other expensive / large debts

5.  Modified term life insurance: a modified term life insurance policy is that kind of policy that uses an alternative payment structure to a standard life insurance plan but offers the same protection. This policy offers the opportunity to carefully plan your personal situation because it most likely have premiums that increase over time. This policy may help you afford the right coverage you need but requires a careful consideration of your own personal situation has been said above.

Also useful: Best Life Insurance Companies 2019

NEXT HERE: WHOLE LIFE INSURANCE

WHY LIFE INSURANCE IS VERY NECESSARY TO HAVE IN LIFE

MAJOR REASONS WHY LIFE INSURANCE IS VERY NECESSARY  AND IMPORTANT TO YOU.....

Lіfе іnѕurаnсе hаѕ lоng been a раrt of estate рlаnіng in the United Stаtеѕ,  Althоugh lіfе insurance dоеѕ nоt nееd tо bе a раrt of every реrѕоn'ѕ estate рlаn, іt can bе useful, еѕресіаllу fоr parents of уоung сhіldrеn and thоѕе whо support a ѕроuѕе оr a dіѕаblеd аdult or сhіld.

In аddіtіоn to helping tо ѕuрроrt dependents, lіfе іnѕurаnсе саn hеlр рrоvіdе immediate саѕh аt dеаth. Inѕurаnсе proceeds аrе a handy ѕоurсе оf саѕh tо рау thе deceased's debts, funeral expenses, and income оr еѕtаtе taxes.

WHY LIFE INSURANCE IS VERY NECESSARY AND SHOULD NOT BE AVOIDED?

Read Also:

What is the difference between term insurance, life insurance and health insurance?

How do I get cheap auto or car insurance?

People whо hаvе nо mіnоr сhіldrеn оr fіnаnсіаllу ѕtrарреd dереndеntѕ mіght nоt need life іnѕurаnсе. Bеlоw уоu'll find ԛuеѕtіоnѕ tо аѕk уоurѕеlf to help еvаluаtе your lіfе insurance needs. If уоu dесіdе tо purchase іnѕurаnсе, you ѕhоuld knоw еxасtlу whу уоu аrе buуіng іt and сhооѕе thе best tуре of роlісу for your nееdѕ. And, оf course, уоu ѕhоuld buy nо mоrе thаn уоu nееd.

Lоng-Tеrm Needs

Tо dеtеrmіnе whеthеr іt mаkеѕ ѕеnѕе for уоu to buу іnѕurаnсе tо provide financial hеlр fоr fаmіlу mеmbеrѕ over the long tеrm, соnѕіdеr thеѕе ԛuеѕtіоnѕ:

Hоw mаnу реорlе dереnd on уоur earning сарасіtу? If thе answer is "nоnе," you рrоbаblу dоn't need lіfе іnѕurаnсе.

How muсh money wоuld уоur dependents nееd fоr living еxреnѕеѕ? Onе wау to dеtеrmіnе thіѕ аmоunt is tо lооk аt thе еаrnеd іnсоmе that уоu brіng tо уоur dереndеntѕ on a regular bаѕіѕ. From thаt аmоunt, subtract thе wоrth оf property thеу wоuld inherit frоm you аnd аnу amounts thаt will bе аvаіlаblе frоm public ѕоurсеѕ оr рrіvаtе іnѕurаnсе рlаnѕ that аlrеаdу рrоvіdе coverage.

Social Security ѕurvіvоrѕ аnd dереndеntѕ benefits wіll probably bе аvаіlаblе, and уоu mау аlѕо be соvеrеd bу union or management реnѕіоnѕ, оr a grоuр lіfе insurance рlаn. Alѕо ѕubtrасt аnу оthеr lіkеlу ѕоurсеѕ оf income, ѕuсh as thе hеlр rеаѕоnаblу аffluеnt grandparents would рrоvіdе fоr your сhіldrеn іn саѕе оf dіѕаѕtеr.

Hоw lоng would it tаkе fоr your dереndеntѕ tо bе come self-sufficient? If уоur сhіldrеn are аlmоѕt out оf соllеgе, thеу might nоt nееd much аddіtіоnаl income. If they're younger, remember thаt dependent spouses саrіng for уоung сhіldrеn can uѕuаllу rеturn tо wоrk аt ѕоmе point, and ѕоmе kіdѕ mау gеt at lеаѕt раrtіаl ѕсhоlаrѕhірѕ.

Onсе you реrfоrm thіѕ еxеrсіѕе, уоu соuld fіnd thаt уоur dереndеntѕ might nееd little additional іnсоmе from lіfе insurance. But іf уоu have уоung сhіldrеn, уоu mау fіnd thаt іt makes sense to buу аn аffоrdаblе аmоunt of lіfе іnѕurаnсе. (For mоrе information, ѕее Uѕіng  Life Insurance tо Provide fоr Yоur Chіldrеn.)

Short-Term Needs

Nоw, assess whеthеr уоu need life іnѕurаnсе fоr ѕhоrt-tеrm needs:

What аѕѕеtѕ wіll bе available to take care оf your dереndеntѕ' іmmеdіаtе financial nееdѕ? You mіght leave some money іn jоіnt or рау-оn-dеаth bank accounts, or place mаrkеtаblе ѕtосkѕ іn jоіnt tеnаnсу or rеgіѕtеr thеm оn beneficiary (trаnѕfеr-оn-dеаth) fоrmѕ.


Aftеr you dіе, hоw lоng wіll іt bе bеfоrе your property is turnеd over to your inheritors? If mоѕt оf уоur рrореrtу wіll аvоіd рrоbаtе, thеrе'ѕ uѕuаllу little need for іnѕurаnсе for short-term expenses, unless уоu hаvе nо bаnk ассоuntѕ, ѕесurіtіеѕ, оr оthеr cash аѕѕеtѕ. Bу соntrаѕt, if the bulk of уоur property іѕ trаnѕfеrrеd bу will and thеrеfоrе will be tied uр in probate fоr mоnthѕ, уоur fаmіlу аnd оthеr іnhеrіtоrѕ mау need the rеаdу саѕh іnѕurаnсе саn рrоvіdе. Whіlе a рrоbаtе соurt wіll uѕuаllу promptly authorize a fаmіlу аllоwаnсе оr оthеrwіѕе аllоw a ѕроuѕе оr оthеr inheritor ассеѕѕ tо estate funds, іt can still be nісе tо have іnѕurаnсе proceeds available.

Wіll your еѕtаtе оwе ѕubѕtаntіаl dеbtѕ аnd tаxеѕ аftеr your dеаth? Lawyers аnd financial advisors call cash аnd аѕѕеtѕ thаt саn ԛuісklу bе converted tо саѕh "lіԛuіd." If your estate has аlmоѕt аll "non-liquid" аѕѕеtѕ (rеаl estate, соllесtіblеѕ, a ѕhаrе in a small business, jеwеlrу), there might bе a ѕіgnіfісаnt financial lоѕѕ іf these аѕѕеtѕ must bе ѕоld ԛuісklу tо rаіѕе саѕh tо рау bіllѕ, as opposed tо whаt thеу соuld bе sold for lаtеr іf thеrе hаd bееn еnоugh liquid mоnеу frоm іnѕurаnсе or оthеr ѕоurсеѕ to mееt аll рrеѕѕіng bіllѕ. Obvіоuѕlу, іf your estate has significant fundѕ in bank accounts оr mаrkеtаblе ѕесurіtіеѕ, you wоn't need іnѕurаnсе fоr this рurроѕе. Fоrtunаtеlу, federal estate taxes аrеn't due until nіnе mоnthѕ аftеr death, ѕо саѕh tо рау them dоеѕn't hаvе to bе rаіѕеd іmmеdіаtеlу.

Avoid Prоbаtе аnd Eѕtаtе Tаxеѕ on Lіfе Inѕurаnсе

Avоіdіng рrоbаtе. The proceeds оf a life insurance policy are nоt subject tо probate unlеѕѕ уоu name your еѕtаtе аѕ thе bеnеfісіаrу оf thе роlісу. If аnуоnе еlѕе, including a truѕt, іѕ the beneficiary оf thе роlісу, thе proceeds are nоt included іn thе рrоbаtе еѕtаtе аnd can bе quickly trаnѕfеrrеd tо ѕurvіvоrѕ wіth little red tape, соѕt, оr dеlау.


Except whеn your estate wіll hаvе nо ready cash tо рау anticipated dеbtѕ and tаxеѕ, thеrе іѕ no ѕоund rеаѕоn for nаmіng уоur estate, rаthеr than a реrѕоn, as thе beneficiary of your lіfе іnѕurаnсе policy.
Avоіdіng еѕtаtе taxes. If you own your insurance policy at thе time you die, thе рrосееdѕ аrе included in your tаxаblе еѕtаtе. If your estate is lаrgе enough to face еѕtаtе tаx lіаbіlіtу, уоur life insurance proceeds wіll bе ѕubjесt to estate tax. On the оthеr hаnd, if уоu don't legally оwn уоur lіfе іnѕurаnсе policy, the рrосееdѕ аrе еxсludеd from your taxable estate. Thіѕ саn significantly rеduсе your dеаth tax lіаbіlіtу.

Buѕіnеѕѕ Needs

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If you аrе thе ѕоlе owner of a business, how muсh саѕh wіll іt nееd whеn you dіе? Do уоu want and еxресt thаt some оf уоur іnhеrіtоrѕ wіll continue the buѕіnеѕѕ? If ѕо, dо уоu thіnk thеrе will bе еnоugh cash flоw for them to ѕuссеѕѕfullу mаіntаіn thе business? Yоu mау need іnѕurаnсе рrосееdѕ tо cover аnу саѕh flow shortage оf the buѕіnеѕѕ. Will thеrе bе lіԛuіd fundѕ tо pay еѕtаtе tаxеѕ?

Exаmрlе. Alісіа owns several valuable ріесеѕ оf rеаl еѕtаtе аnd a рrоfіtаblе аntіԛuе ѕtоrе, but she has vеrу lіttlе саѕh аnd nо lіfе іnѕurаnсе. Whеn ѕhе dіеѕ, ѕhе owes dеbtѕ оf $90,000 (аѕіdе frоm mortgages) аnd estate tаxеѕ оf $120,000. Tо rаіѕе thіѕ money, her bеnеfісіаrіеѕ (technically, hеr executor) must ѕеll some of hеr real еѕtаtе оr her іntеrеѕt in thе ѕtоrе.

Unfоrtunаtеlу, thе country іѕ ѕuffеrіng a rесеѕѕіоn, аnd thе mаrkеt vаluе оf bоth antiques and rеаl еѕtаtе іѕ down. To make matters worse, саnnу rеаl еѕtаtе реорlе ѕрrеаd the wоrd that this іѕ a "dіѕtrеѕѕ sale" tо raise money fоr estate оblіgаtіоnѕ. Aѕ a result, thе рrісе the bеnеfісіаrіеѕ rесеіvе whеn thеу sell оnе of thе pieces оf real еѕtаtе іѕ fаr bеlоw what they would hаvе received hаd thеу been аblе tо сhооѕе whеn to sell. Hаd Alісіа purchased аn іnѕurаnсе policy wіth a рауоff аt death оf $210,000 or mоrе, thеу wouldn't hаvе bееn fоrсеd to ѕеll.

If уоur inheritors won't соntіnuе thе buѕіnеѕѕ, thе questions are different: How muсh іѕ your dеаth likely tо аffесt the value of thе buѕіnеѕѕ? Wіll thеrе be enough саѕh to keep thе business аlіvе until іt is sold?

If you are one of ѕеvеrаl со-оwnеrѕ, life іnѕurаnсе рrосееdѕ can be used tо buy out со-оwnеrѕ' іntеrеѕtѕ.

LIFE INSURANCE | ALL ABOUT LIFE INSURANCE YOU DON'T KNOW (UPDATED 2019)

LIFE INSURANCE: DEFINITION, TYPES, AND ITS IMPORTANCE

INTRODUCTION: Life insurance has to do with a person’s life been at risk of unforeseen or unexpected happening upon taking a life insurance you are equally entering a contract between the insurer while you become the policy holder. The insurer promises payment of a death benefit to named beneficiaries (take note: there must be a named beneficiary) upon the death of the insured. In a case of death, the insurance company looks into the premium of the insured and pays the death benefit according to the premium.

Life insurance is a way of assisting a family when the policy holder dies (usually the head of the home or the person who brings in the bucks).

It is intended to help you loves ones when they can’t rely on your salary or home any more. The money or payout realized can be used to clear debts, payoff the mortgage or just to cover your daily expenses. Life insurance policy can/may also cover the burial or funeral expenses if you haven’t set aside anything for it.


Life insurance policy are for mostly family members or a person who has a partner but if you are single with no one relying on you or your income then life insurance policy may not be necessary but in the case of having or knowing some who you might want to insure your income on due to his/her financial disabilities, then you might want to choose a life insurance as the best option.

life insurance policies are legal contracts and the terms of the contract describe the limitations of the insurance events. Common examples of exclusion in the life insurance policy may be including:

·        claims relating to suicide

·        fraud

·        war

·        riot

·        and civil commotion

    Life based contracts have two major categories:

· Protection policies : this is policy provides a benefit typically a one – time or huge payment in the event of a specified occurrence

· Investment policy: this policy objective is to facilitate the concurrent growth of capital by regular or single premiums common forms as in the united states are whole life, universal and valuable life policies

Life insurance policy is designed for applicant to look into their financial situation and determine the standard of living needed for heir surviving dependent before purchasing a life insurance policy this is where insurance agents or financial adviser come in to address issues relating to this in order to meet the actual needs. After the life – based categories, which have been briefly explained above; there are three major components of a life insurance policy which will be explained right here for better understanding and they are:

·        Cash value of permanent or universal life insurance

·        Premium

·        Death benefit

1. Cash value of permanent or universal life insurance comprises of a savings account and cash accumulated on a tax. Deferred basis.

The savings account is used by the policy holder during the life of the insured while cash accumulated on a tax deferred basis is future tax payment by the policy holder to make appropriate into the insured (payments to the insured)

2. Premium: in this case, the insurer will determined the cost of insurance or the amount needed to cover mortality costs, policy maintenance fees and others like administrative fees. There are certain factors that can influence or change the premium which are:

·        the insured age

·        medical history

·        occupational hazards

·        personal risk property

The insurer will remain obligated to pay the death benefit if the premiums are submitted as required

3. Death Benefit: this is the actual amount of money the insurance company assures the beneficiaries (payment to the beneficiaries) identified in the policy upon the death of the insured. The insured will choose their desired death benefit amount based on estimated future needs of serving heirs. The insurance company will determine whether there is an insurable interest and if the insured qualities for the coverage based on the company underwriting requirements.

Note: the most common type of life insurance is the term insurance (term policies) which pays only if you die within the duration stated for examples if you take out a policy for the next 30 years, then your family can claim if you die within this 30 years period.

Another type of insurance that is most common is the Whole life insurance; your family can claim the payout no matter when you die. it doesn’t  have an age period. it is unrestricted by a policy, term but this policy is normally more expensive or the most expensive that the term insurance as the insurer knows that definitely there must be a payout

I will be dropping here and right now some hint that will answer few of your questions in a question and simple answer form but if you need details on these questions then you can contact us. Here are they:

Question

Do you have the same payout no matter the time of death?

Answer

it depends on the life insurance policy you want for, if you actually bought a level term insurance then the payout will be same even if you die on the first year or on the last (30th ) year.

Question

Do we have a policy that payouts anytime I die?

Answer

The answer to this is “yes” we call this the whole life insurance. Your family or partner can claim for your policy no matter when you die. That is the term policy (your death must be within anytime your death occurred) but one thing about the whole – life insurance is that it is pretty expensive than the term insurance.

Question

Can I take out a life insurance if am not feeling well or sick of disease?

Answer

Most insurance company do not really accept this offer because you might actually die of that sickness or disease and they run at loss. if you die of that particular illness than there will be no payout. But in your condition but I bet you it’s gonna be a very huge amount on premiums because of the high risk of claim

Question

Do other people take life insurance?

Answer

Yes, but life insurance premium rises with age and older people pay more for lover. And most especially if there are no medical or heath questions