California Life Insurance
Purchasing life insurance in California involves more than selecting the level of death benefit to cover your specific financial needs. You must also determine which type of life coverage is best suited for your household budget, financial goals and objectives and to provide for your survivor’s current and future income needs. There are four primary types of California life insurance coverage available today- term life, whole life, universal life and variable universal life.
Term Life
Term life is a form of ‘pure’ life protection, also referred to as temporary coverage. Term life provides a specified death benefit to the insured’s listed beneficiaries in the event that the insured dies within the specified time frame. For example, if John purchases a 10 year, $500,000 term at age 45, the policy will pay this death benefit to John’s listed beneficiaries in the event that he dies prior to age 55, as long as the policy remains in force. Term life provides the maximum amount of life protection with the lowest initial outlay of funds.
Whole Life
Whole life insurance provides payment of a death benefit of face amount of coverage to the listed beneficiaries upon the death of the insured, whenever this may occur. This type of life policy provides death benefit coverage for the insured for their ‘whole life.’ In addition to providing a death benefit, whole life policies enable the insured to build a cash value up within the policy, earning a stated interest rate on an annual basis.
Universal Life
This type of life protection provides the insured with more flexibility than a traditional whole life policy. When an insured makes a premium payment, a portion is applied as a premium payment, while the other portion is deposited into the policy’s cash value account. Universal life can also be referred to as interest sensitive as unlike whole life, this type of policy utilizes changing rates to determine cash values. The interest rate paid on the cash savings plan will vary annually based upon market conditions, however the underlying interest rate is guaranteed annually. More importantly, the premium amount is variable on annual basis. The policy owner can pay whichever premium amount they wish on an annual basis.
Variable Universal Life
This type of policy combines a guaranteed death benefit with a non-guaranteed savings feature. Because this policy integrates securities and investment vehicles with insurance principles, the individual representing offering this strategy must carry dual licenses with their respective insurance agency and the SEC. Due to the growth potential of the underlying equities (stocks, bonds, mutual funds) within this type of policy, the cash value may outperform other plans. The variable universal life policy also offers the policy owner flexible premium options. The primary purpose for purchasing this type of policy is to leverage the potentially tax free cash accumulation amounts for financial goals and objectives, such as college or retirement planning.
Each of these four insurance policy types offers a variety of advantages which should be considered prior to making a purchasing selection.
Hi,
Most people are in the dark about choosing what life insurance policy is best for their needs.
To be honest some agents are not very straightforward about it and try to upsell the customer as much as possible to fatten their commissions. What they don’t realize is that they aren’t building a relationship and losing out on more commissions when the policyholder feels cheated and won’t recommend his agent to his friends and family and may change agents as soon as possible.
Thanks,
Erwin, Life Insurance Quotes For Consumers
Erwin Chua´s last blog ..Keeping COBRA Benefits A Struggle For Laid-Off Workers in 2010
Kim Hartley Leading skin care specialist Everything you need to know about your skin and hair says…You really have to do your research on this one. I couldn’t agree more about building a relationship when trying to sell insurance. Afterall, wouldn’t that be more beneficial in the long run?
Regards
Kim (Have Younger Skin) Hartley´s last blog ..Combining a Natural Acne Scar Treatment with Anti Aging Creams Gets the Best Results