Types of Life Insurance - The Two Major Policy Types

There are lots of different varieties of life insurance policies but they always stem from two main but basic types of Life Insurance - Term Life and Whole Life Insurance.

Term Life A term life insurance policy is only covered for a specified period. This is usually a period of 1 to 20 years but it is worth noting that some insurance companies will sometimes offer a longer period. In brief the insurance is only paid out to the beneficiary upon death of the insured and this is only when the insured dies within the specified term of the policy.

Whole Life Insurance Whole life insurance is also known as permanent life insurance. It is a policy that lasts an entire lifetime provided that premiums are up to date and are being paid according to the agreed terms and conditions of the policy. With whole life insurance death benefit is paid to the beneficiary regardless of whether the insurer is 39 or 99 years old, there is no specified period.

There are many varieties of these two basic insurance policies and the easiest and most convenient way to get quotes is to go online and use an online insurance site. It takes as little as 15 minutes to obtain quotes from 3 different insurance agents. It is very important that when you complete the on-line forms and/or questionnaires the details that you give are accurate and honest. Once you receive the quotes you can then take as much or as little time as you need to select the best option to suit you and your needs.

Free Life Insurance Quotes For Single Parent

If you are a single parent, life insurance will be one of the most important buying decisions you will ever make. In the event of the unexpected, life insurance proceeds will help finance the future needs of your children like their education and other bills when you die. Since you love your children so dearly, you will not want them to suffer any financially when you die. Therefore, you need life insurance. Life insurance provides cash to your family after your death. This cash (known as the death benefit) replaces your income and can help your children meet many important financial needs like funeral costs, daily living expenses and college funding.

Remember that as a single parent, you are the father and the mother. You want to give the best education to your children. Yet, it is surprising that nearly 4 in 10 single parents have no life insurance whatsoever, and many with coverage say they need more than they have. With so much responsibility resting on your shoulders, you need to make doubly sure that you have enough life insurance to safeguard your children’s financial future.

Do not think you do not need life insurance. Most single parent Americans need life insurance. To find out if you need life insurance, you need to think through the worst-case scenario. If you died tomorrow, how would your children you have labored so much to raise fare financially?

Would they be able to pay for your final expenses (e.g., funeral costs, medical bills, taxes, debts, lawyers’ fees, etc.)? Would they be able to meet ongoing living expenses like the rent or mortgage, food, clothing, transportation costs, health care, etc? What about continuing their education? Will they have the money to pay for their college education?

The truth is that if you do not plan for the future of your children, they will suffer when you are not there to take care of the expenses. Life insurance helps make sure that your children will be provided for financially, even if you are not there to care for them yourself.

Types Of Life Term Insurance - Term Life Is The Cheapest Option - Here Are 8 Types Of…

There are actually eight different types of term life insurance available for consumers, although there are a couple differences and one is only sold as a rider. Let me touch on each one of these briefly.

#1. The first five types of term insurance are non-renewable/non-convertible term, which expires at the end of the stated period of coverage.

#2. Renewable term - this policy can be renewed at the end of the stated period without having to have a new medical exam.

#3. Convertible term - this is term life with conversion privilege. It can be changed to one of the higher premium policies such as whole life or endowment at any time.

#4. Re-Entry term - this is the cheapest of all term life policies, if the person to be insured qualifies for it.

#5. Deposit term - this is a 10 year renewable term life policy where you make a deposit at the inception.

In the next two types of term life insurance the face value of the policy remains constant or changes.

#1. Level term -the face value of this policy stays the same. The policy premium remains the same for the entire term of the policy.

#2. Decreasing term - the face value on a decreasing term policy goes down over time. This type of policy is typically used to pay off mortgages and is sometimes called mortgage life insurance.

#3. Increasing term - increasing term life is a policy where the face value goes up regularly each year. Increasing term is only sold as a rider.

Term life insurance is by far the least expensive option of all of the different types of life insurance available, such as whole life, endowment, etc.. All have their advantages and disadvantages. Term life does not build any type of cash value. It’s what is known as “pure” life insurance because 100% of the premiums that you pay go toward paying for insurance and nothing else.

You can buy term life in different increments such as a 10 year term, 20 year term, etc.. If you’re considering purchasing life insurance for yourself and or your family, I highly recommend that you take a good look at term as an option.

Lowest Term Life Insurance Rates - How to Get Them

If you really want the lowest term life insurance rates, you’ve come to the right place. I’ll take you through a few simple steps that will guarantee you the lowest rates possible.

You will not have to do much if what you want is just the lowest rate for your current profile. However, if what you want is the lowest rate possible, then you may have to make some adjustments in your life style. I’ll start with those that require a bigger adjustment:

1) Reduce your weight if you’re overweight.

2) Quit smoking for at least 13 months and then reapply. You’ll get lower term life insurance rates.

3) Quit dangerous sports if you participate in them.

4) Change to another job if your current job exposes you to hazards.

5) Get term life insurance quotes from reputable insurance quotes sites. You can save several hundreds or even a few thousand dollars by simply receiving quotes from about three quotes sites. All you’ll have to do is pick the lowest rate from quotes returned.

Visiting at least three quotes sites raise the chances that you would realize more savings. The plain logic in this is that you’ll get many more quotes from many more insurers. This increases your chances of receiving better quotes.

Take some time out to check out the insurance company you intend to settle for. You don’t want to get hooked with an insurer who will compromise you. Know their ratings using different independent research companies and your state’s department of insurance (This becomes almost unnecessary if you are sure you got your quotes from a reputable insurance quotes site).

And again, when you finally get your lowest term life insurance rates and decide to switch to another insurer (for those who already have a term life policy), make sure you do not terminate your contract with your current insurer until the new policy is fully operational. This is because if you do that and something happens within the switching period you’ll be without any life insurance policy.

Now, go ahead and get the lowest rates from only reputable insurance quotes sites.

What Does the AIG Meltdown Mean For Life Insurance Policyholders?

News of the global insurer AIG’s financial meltdown was hard to ignore. Once the Federal Reserve provided an $85 billion loan package, AIG avoided bankruptcy in the short term. In exchange, AIG must pay a high interest rate on the loan (over 11%), agree to oust its CEO and give warrants that equal 80% ownership to the US federal government. The capital and liquidity crunch faced by AIG resulted in from it’s exposure to bad mortgage debt by the parent AIG holding company.

Repercussions for Policyholders

You may own a life insurance policy from AIG or one of its subsidiaries (American General or US Life of NY). These companies’ capital and reserves are heavily regulated by state law. Each entity is responsible for its own liabilities. Therefore, policyholders are less exposed to the financial turmoil of the parent AIG holding company.

What are the experts saying?

To relieve policyholder anxiety, American General released the statement: “American General Life is well capitalized to meet or exceed local regulatory capital requirements and fully committed to meeting the needs of their policyholders across the U.S.”

The National Association of Insurance Commissioners (NAIC) released the following statement: “We have a very strong message for consumers: If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims”.

The New York State Insurance Commission made a similar reassuring statement on CNBC. Panicking policyholders who dump their life policies will only add to the erosion of financial assets and revenue by AIG, exacerbating the problem.

Worse Case Scenario

But with front page headlines and a deepening financial crisis, consumers are still uncertain and anxious about their policies. What is the worst case scenario? If AIG or any insurance company goes insolvent, every state has life insurance guaranty funds. The state will, in effect, take over the company and assume responsibility for liabilities, usually up to $300,000 of death benefit, depending on the state. Policyholders are first in line for any assets the insurance company owns. An effort is made to have the book of policies absorbed by one or a group of insurance companies.

What should I do?

Consumers buy life insurance for peace of mind and news of possible financial insolvency do not provide much peace. But before making a rash decision, consider all your options and do not panic. Some consumers want to drop their coverage and replace it with another policy from a more stable insurance company. However, this may not be in your best interest, especially if your health has changed since you applied for your policy, you’re older so the policy may cost more and there is no guarantee that the company you are switching to will not have financial issues of their own in the future.

In most cases, it makes sense to ride out this storm. If you are convinced you want to make a change or just need reassurance, speak to an insurance professional that represents many insurance companies and can help you put together an overall insurance plan. By reviewing your policy, you may decide you need more insurance or less. The silver lining for many consumers is they are now paying attention to their own insurance portfolio to make certain it is meeting their needs.