The purpose of a life insurance policy is to financially protect the dependents of a person when he or she dies. An ongoing benefit will be paid to any named dependents upon the policy-holder's death to cover their living expenses and the funeral costs of the deceased. Different types of policies are available to suit the needs of every customer, when it comes to buying life insurance Chicago consumers should be aware of these main guidelines.
Employers may offer such policies as part of their employee's benefits package, although usually there is less flexibility and possibly lower coverage, and if employment is terminated, so is the policy. One must first find out if he or she has any coverage through work and if so, how much before purchasing an individual plan.
Life policies can generally be classified as term, whole, universal, or variable. The most common type, term, is reasonably affordable and offers substantial coverage. Tax-free death benefits are issued to beneficiaries if the insured dies within a specified time period, the "term" of the policy. It is possible to renew a term policy, however, the premium will likely be increased as the insured will be of a more advanced age.
A whole life insurance policy generally attracts a higher premium, and commissions paid to one's agent. It has no expiry and instead of providing a death benefit alone, it also builds a savings fund that will gradually accumulate interest and is only taxable when withdrawn. This is a good option for those who plan on keeping it permanently or for a long time, otherwise they may end up losing money.
A universal policy gives the insured a fair amount of flexibility in terms of how much benefits are paid, and the amount and frequency of the premiums. The money is paid into an investment fund from which administrative costs and the death benefits are taken. This fund is subject to gaining interest according to current market rates, which can have either a positive or negative effect on its value.
A variable life insurance policy invests the premium into assets such as stocks or bonds of the policy-holder's choosing. The performance of these investments during the length of the policy will ultimately determine which amount of death benefits are available to the beneficiaries of the insured. It is also possible to cash it in for the taxable cash value, but there is no guaranteed minimum, and it can drop to zero.
There are different ways a customer can purchase insurance, although the safest bet is to deal with an agent who represents an insurance company with a solid foundation. Besides being licensed in one's state, a good agent will answer any questions his or her clients may have, won't pressure them into making a decision, and will ensure that they understand exactly what they are getting for their money.
In order to apply for coverage, the applicant will need to fill out a questionnaire and possibly get a physical. All relevant health information must be disclosed fully and questions answered honestly. The company will decide whether to insure the applicant based on this information, and if they do it will be used to determine the premium.
Employers may offer such policies as part of their employee's benefits package, although usually there is less flexibility and possibly lower coverage, and if employment is terminated, so is the policy. One must first find out if he or she has any coverage through work and if so, how much before purchasing an individual plan.
Life policies can generally be classified as term, whole, universal, or variable. The most common type, term, is reasonably affordable and offers substantial coverage. Tax-free death benefits are issued to beneficiaries if the insured dies within a specified time period, the "term" of the policy. It is possible to renew a term policy, however, the premium will likely be increased as the insured will be of a more advanced age.
A whole life insurance policy generally attracts a higher premium, and commissions paid to one's agent. It has no expiry and instead of providing a death benefit alone, it also builds a savings fund that will gradually accumulate interest and is only taxable when withdrawn. This is a good option for those who plan on keeping it permanently or for a long time, otherwise they may end up losing money.
A universal policy gives the insured a fair amount of flexibility in terms of how much benefits are paid, and the amount and frequency of the premiums. The money is paid into an investment fund from which administrative costs and the death benefits are taken. This fund is subject to gaining interest according to current market rates, which can have either a positive or negative effect on its value.
A variable life insurance policy invests the premium into assets such as stocks or bonds of the policy-holder's choosing. The performance of these investments during the length of the policy will ultimately determine which amount of death benefits are available to the beneficiaries of the insured. It is also possible to cash it in for the taxable cash value, but there is no guaranteed minimum, and it can drop to zero.
There are different ways a customer can purchase insurance, although the safest bet is to deal with an agent who represents an insurance company with a solid foundation. Besides being licensed in one's state, a good agent will answer any questions his or her clients may have, won't pressure them into making a decision, and will ensure that they understand exactly what they are getting for their money.
In order to apply for coverage, the applicant will need to fill out a questionnaire and possibly get a physical. All relevant health information must be disclosed fully and questions answered honestly. The company will decide whether to insure the applicant based on this information, and if they do it will be used to determine the premium.
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