Life Insurance

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Life Insurance is an insurance in which the risk insured against is the death of a particular person, the insured, upon whose death while the policy is in force, the insurance company agrees to pay a stated sum or income to the beneficiary.

Term Life Insurance is a low-cost form of life insurance that stays in effect for a specific period of time. If the insured dies during the coverage period, the beneficiary will receives the death benefit. If the insured survives the specified time period, the policy expires and the obligations terminate. Term insurance works best when the coverage is needed for only a specific period of time or near-term cost is an overriding factor. In early years, term insurance costs are less then a Whole Life or other cash value policies. Term insurance becomes increasingly expensive as the insured grows older.

Whole Life Insurance is life an insurance that is kept in force for a person's whole life as long as the scheduled premiums are maintained. All Whole Life policies build up cash values. Most Whole Life policies are guaranteed as long as the scheduled premiums are maintained. The variable in a Whole life Policy is the dividend which could vary depending on how well the insurance is doing. If the company is doing well and the policies are not experiencing a higher mortality than projected, premiums are paid back to the policy holder in the form of dividends. Policyholders can use the cash from dividends in many ways. The three main uses are: it can be used to lower or vanish premiums, it can be used to purchase more insurance or it can be used to pay for term insurance.

Variable Life Insurance is a form of whole life insurance under which the death benefit and the cash value of the policy fluctuate according to the investment performance of a separate account fund. Most variable life insurance policies guarantee that the death benefit will not fall below a specified minimum. A minimum cash value is seldom guaranteed. Because the policy owner assumes investment risk under variable life insurance policies, these products are considered securities contracts. In the United States, variable life insurance policies must be registered with the Securities and Exchange Commission (SEC), and only agents who have passed the National Association of Securities Dealers (NASD) examination may sell this product. In Canada, variable life insurance policies are considered life insurance contracts, and agents do not need a special license to sell these products.

Universal Life Insurance is a flexible premium life insurance policy under which the policyowner may change the death benefit from time to time (with satisfactory evidence of insurability for increases) and vary the amount or timing of premium payments. Premiums (less expense charges) are credited to a policy account from which mortality charges are deducted and to which interest is credited at rates, which may change from time to time.