Basic principles of life insurance
Many financial experts believe that life insurance is the cornerstone of health
Financial planning. This can be an important tool in the following situations:
1. Substitute income of dependents
If people depend on their personal income, life insurance can replace it
Income when the person dies. The most common example is this
Income replacement insurance baby is especially useful in the following cases:
benefits sponsored by the government or employer of the surviving spouse; Or
In case of death of common life partner, it is reduced.
2. Pay the final fee
Life insurance can pay for funeral and burial expenses, bail and other property management expenses and debts and medical expenses that are not covered by health insurance.
3. Creating an inheritance for the heirs
Even those who have no other assets to inherit can create an inheritance by purchase
Get a life insurance policy and name your heirs as beneficiaries.
4. Pay federal "death" tax and state "death" tax
Life insurance benefits can pay inheritance taxes so heirs don't have to liquidate other assets or receive a smaller inheritance. Changing the "death" of the commonwealth
Tax regulations effective January 1, 2011 may reduce the impact of this tax.
Some people do, but some states have raised property taxes at the state level to offset federal cuts.
5. Make a large charitable donation
By converting charities from life insurance policies, individuals
You can make a much bigger contribution than donating cash equivalents
From the premium of the insurance policy
6. Create a savings source
Some types of life insurance build up cash value if not paid out at death
Interest can be borrowed or withdrawn at the request of the owner. most
People prefer to pay life insurance premiums.
A cash value type policy can create a "forced" savings plan. Furthermore,
Interest received is tax-deferred.
death benefit).
Types of life insurance
There are two main types of life insurance: term and whole life.
1. Compatibility
Term insurance is the simplest form of life insurance. Only active when dead
typically occurs during a policy of one to 30 years.
Most insurance policies do not include additional benefits. There are two main types
term life policy: term and declining term. The meaning of the degree
that the funeral premium remains the same throughout the policy.
The declining term means that the death benefit decreases over the life of the policy, usually increasing by one year.
2. Whole Life/Eternal Life
Whole life or permanent insurance pays a death benefit when the policyholder dies. There are three main types of whole life or permanent life insurance - standard whole life, universal and variable universal life, etc.
there are variations in each type.
In the case of traditional whole life insurance, both the death benefit and the premium are designed to remain at the same level (rate) throughout the life of the policy. The
Of course, the benefit value of $ 1,000 increases with young insured
very high if the insured lives 80 years or more. The insurance company maintains the premium amount by paying the premium for the first few years
Pay off more debt than you need to invest and then use that money
this will increase the premium to a level that will help pay the cost of life insurance
old people.
By law, these "overpayments" must be made when they reach a certain amount
is available to the policyholder as a cash value if they choose not to continue
with the original plan. Cash value is an alternative and not additional income on the policy. In the 1970s and 1980s, life insurance companies offered two types of standard life products: term life insurance and variable universal life insurance.
Some types of whole life/permanent life insurance are described below.
• Universal Life: Universal life, also known as adjustable life, provides more
more flexibility than the standard life policy. Rescue vehicle (called a
cash value account) often earn money market interest rates. next
so the money will be collected in the politician's account
Option to change premiums - if you have enough money there
expense account.
• Variable Life: Variable life policies combine death protection with aa savings account that can be invested in stocks, bonds and the money marketmutual funds. The value of the policy may grow faster, but it includesgreater risk. If investments do not perform well, cash value and deaththe benefit may decrease. However, some policies guarantee that deaththe advantage will not fall below the minimum level.
• Variable Universal Life: This type of policy combines features
variable and universal life insurance policies, including investment risks andthe rewards characteristic of variable life insurance and the ability to adaptpremium and death benefit that is characteristic of universal lifeinsurance.
