Unlike term and whole life insurances, this policy blends term insurance and an investment account into one contract. Also its premiums can be increased or decreased, paid when due or at unscheduled dates, or stopped entirely and restarted at the owner's will provided the policy value is adequate to maintain the cost of the insurance.
This type of policy is adapted well to satisfy the changing insurance and investment needs of its owner.
(By Kyle J. Norton)
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Types of Life Insurance - What Kind of Life Insurance Do You Need?
Do you know what kind of life insurance you need? The fact is that most people do not. If you're anything like I was then you have no clue. Well when I was looking to purchase insurance I did the leg work for us. Basically there are 3 different types of Life insurance.
They are:
Term Life
Whole Life
Universal Life
Most people don't know that they exist let alone what the difference is.
Term life is simple an insurance policy that will expire before you die if you out live the term. This is used to protect yourself when you are paying off a lot of debt.
Whole life insurance is used as kind of a long term investment as well as a trust fund for your family that will outlive you. It builds a cash value and only expires when you die or stop paying the premiums.
Now universal life is a whole different bird. It has been the topic of controversy. It has very appealing cash value possibilities but they are very risky especially now due to the economy.
I would not risk the universal policy. Really you need to look at insurance as a way to protect your family not as an investment.
Warning: Too many people don't know the facts about life insurance. Don't be one of them. The best thing to do is to start getting quotes from different companies. This does not need to be time consuming. But you must get multiple quotes to eliminate any shady agents.
Are you going to waste your time like most others? Don't waste your time do what I did. Get a Free No obligation life insurance quote.You'll thank me later go to http://instant-life-insurance-quotes.weebly.com. Don't walk, run to this.
Article Source: http://EzineArticles.com/?expert=Ian_Reese
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A whole life insurance policy covers you for your entire life. Your death benefit and premium in most cases remain the same. Whole life also builds cash value, which is a return on a portion of your premiums that the insurance company invests. Your cash value is tax-deferred until you withdraw it and you can borrow against it.
A whole life insurance policy may be used as a part of your estate planning. Consequently, whole life insurance is a good choice for you if you want to ensure that you have a life insurance policy in place for your entire lifetime and can comfortably afford the premiums, of if it fits within the framework of your estate or retirement plan.
While whole life insurance is designed to provide coverage on the insured for the insured's entire life as long as the premiums are paid and the policy has not been surrendered, term life insurance provides coverage only for a fixed period that is stated in the policy. It can be for one year or up to thirty years. Term insurance premiums are extremely affordable for a person in good health up the age of fifty. After that age, the premiums start to get progressively more expensive. Term should be purchased if you only need insurance for a specific period of time, such as if you want an outstanding fifteen or thirty year mortgage balance paid off in the event of an untimely death.
Universal life is a type of flexible permanent life insurance offering the low-cost protection of term life insurance as well as a savings element, like whole life insurance, which is invested to provide a cash value buildup. The death benefit, savings element and premiums can be reviewed and altered as a policyholder's circumstances change. In addition, unlike whole life insurance, universal life insurance allows the policyholder to use the interest from his or her accumulated savings to help pay premiums.
Universal life insurance was created to provide more flexibility than whole life insurance by allowing the policy owner to shift money between the insurance and savings components of the policy. Premiums, which are variable, are broken down by the insurance company into insurance and savings, allowing the policy owner to make adjustments based on their individual circumstances. For example, if the savings portion is earning a low return, it can be used instead of external funds to pay the premiums.
Unlike whole life insurance, universal life allows the cash value of investments to grow at a variable rate that is adjusted monthly. As an example, the Indexed Universal Life may base the performance of its cash values on one of several indices, including the S & P 500 or the Dow Jones Industrial Averages. Moreover while it provides an opportunity for growth, it has guaranteed returns and provides considerable stability. In that it provides both growth potential and a safety net, it is excellent for college planning or retirement supplemental planning.
Keep up to date with timely financial tips and subscribe to the newsletter. Visit http://www.yourinfo.blogspot.com Will Barnes is a financial and personal growth consultant based in Illinois.
Article Source: http://EzineArticles.com/?expert=Will_Barnes
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Live Your Life Insurance
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Although equity indexed annuities have been around for a number of years, equity indexed universal life (EIUL) insurance is a relative newcomer to the life insurance marketplace. EIUL is a spin on universal life (UL) insurance, a popular policy type because you can increase or decrease your death benefit as your needs change and your premiums can be adjusted accordingly. UL policies also build a cash value against which you could borrow or even use to pay your premiums.
The equity indexed concept is relatively simple: the amount of interest credited to your policy's cash value is tied to the performance of a particular index (the S&P 500 is one of the most popular), so that in years where the index performs well your interest crediting rate will rise, and in years where the index performs poorly, your interest crediting rate will fall.
Most policies guarantee that your interest crediting rate will never fall below zero so that you won't lose money (you just won't make it). They also have a cap as to how high a crediting rate they will pass on to you. This range of possible rates is often described as offering "upside potential with downside protection."
How It Works
Typically, the big choice facing life insurance buyers is whether to go with a "safe" universal life policy that offers a minimum guaranteed rate but limited potential for cash accumulation or to go with a more "risky" variable life policy that offers greater potential for earnings but no protection against losses in the market.
EIUL insurance is an attempt to fill the gap between these two approaches. EIUL is universal life insurance in which the cash value is linked to a certain index. If the index is higher at the end of the year, your cash value may go up. If the index stays flat or goes down, your cash value earns the minimum guaranteed interest rate (say, 2 percent). You should note, however, that when your index goes up it doesn't mean that your cash value increase will reflect the full index increase, due to fees, and dividends and capital gains aren't included in the cash value's calculation.
But are these new products the best of both worlds? Let's take a look at both sides of the coin.
The Pros and Cons
One advantage of EIUL is the potential for higher interest crediting rates than a traditional universal policy. Another advantage is that it offers greater protection from market downturns than a variable life insurance policy.
Stephan Mitchell, product & competition analyst for Pacific Life Insurance Co., based in Newport Beach, Calif., points out that while these products are not a cure-all, they can offer "an attractive middle ground for buyers who saw the market downturn of 2001-2002 and are looking for some guarantees." These products can offer some peace of mind to buyers looking for a mix of guarantees and some potential for cash accumulation.
However, there can be disadvantages to having an equity indexed product. The chief disadvantage of an equity indexed product is that it comes equipped with slightly higher risk than a traditional universal policy. Also, the cap rate the maximum rate you may earn limits the upside potential compared to a variable policy and may be changed periodically by the insurance company.
Steven Weisbart, economist for the Insurance Information Institute, also cautions that "the crediting rate system in these products is probably not familiar to would-be buyers and agents." Since there are so many "moving parts" to one of these products, it is sometimes difficult to figure out what the product actually does at first.
EIUL insurance policies do fill a void between the traditional bookends of the modern insurance marketplace, but it would be an overstatement to term them the best of both worlds. EIUL has neither the appealing guaranteed rates of universal life nor the true market participation of variable life insurance. However, EIUL does offer an attractive third option for buyers and may be ideal for folks whose needs have been overlooked by existing insurance choices.
Is It Right For Me?
Equity indexed universal life insurance may be right for you if you fit the following criteria: The potential cash accumulation of variable life insurance is enticing to you but seems too risky and the guarantees of universal life are comforting to you but the potential for cash value accumulation seems too low.
If these conditions describe you, then an equity indexed universal life insurance policy may be an avenue for you to explore. But before deciding on a particular product, be sure to research the insurance company behind it.
After all, the amount of interest you are credited is in the hands of the company and whatever guarantees the product offers are only as solid as the insurer itself. Just as with other types of insurance, always check into the insurer's ratings (A.M. Best, Moody's, Standard & Poor's, etc.) to get a better picture of how strong the company is financially.
Visit Insure.com for a free universal life insurance quote.
Amy Danise is a staff writer for Insure.com. Visit Insure.com for a comprehensive array of comparative auto, life and health quotes, including a vast library of originally authored insurance articles and decision-making tools that are not available from any other single source. Insure.com is dedicated to providing impartial insurance information to consumers. Visitors can obtain instant insurance quotes from more than 200 leading insurers, achieve maximum savings and have the freedom to buy from any company shown.
Article Source: http://EzineArticles.com/?expert=Amy_Danise
Recommended ReadingLive Your Life Insurance
Teaches You Surprising and Viable Strategies
For Developing Prosperity Through
Your Life Insurance Policy
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