Life Insurance Quotes Learning Center
What is life insurance?
Life insurance is a a contract between an insurer and a policy holder. The policy holder agrees to pay the insurer a premium, which is usually a monthly fee. In return, the policy issuer(insurer) agrees to pay a beneficiary(designated by the policy holder) some sum of money upon the policy holder's death. Some policies also pay out under other circumstances, including the policy holder becoming critically ill or terminally ill.
Advantages of life insurance.
Unlike health insurance, the policy holder of a life insurance policy is not also the beneficiary. The benefit to holding a life insurance policy is not financial security for the policy holder, but rather financial security for the beneficiary(usually a family member of the policy holder). The primary advantage for the policy holder is the peace of mind that comes with securing your family or beneficiary's financial future.
What are the different kinds of life insurance?
There are a handful of different kinds of life insurance policy falling under two different categories:
Protection polices and investment policies.
-Term life insurance:
Term life insurance is probably the simplest form of life insurance. There are three components to the policy. The face value of the policy is the amount which will be paid out if the policy is collected on. This amount will either remain constant or decrease over time. The policy's coverage period, or term, is the length of time the policy will remain active. Terms are commonly between five and thirty years in length. Many policies include the option to renew once the term is up. The third component is the premium. The premium is the amount the policy holder has to pay to continue to keep the policy active. This value will either remain the same, or increase over time.
You can get a term life insurance quote here.
Permanent life insurance policies:
Permanent life insurance policies are polices which remain active until they mature. The only ways a permanent life insurance policy can be canceled by the issuer are if the policy holder fails to pay the premium, or the application was fraudulent. Permanent life insurance policies are often called "investment policies" because they accrue value over time. There are four main kinds of permanent life insurance, each acting in a slightly different way.
-Whole life insurance:
Whole life insurance is the most common form of permanent life insurance. As the name implies, whole life insurance doesn't expire after a term, unlike term life insurance. A policy holder typically pays a flat premium for as long as he decides to maintain the policy. This makes it a less desirable choice for many young people, but the benefits of whole life and term life insurance are comparable if the policy holder lives to average life expectancy.
In addition to a death benefit, a whole life insurance policy also has a cash value. It is possible for the policy holder to borrow from the cash value of his policy by taking out a policy loan. If the policy holder dies with any outstanding policy loans, the value is subtracted from the death benefit.
Get a whole life insurance quote here.
-Universal life insurance(UL):
Universal life insurance is a variant of permanent life insurance which allows for more flexible premium payment plan. In addition, the death benefit and cash value have the possibility to change over time. This type of policy is a response to what many perceive as shortcomings in whole life insurance. The policy holder is also allowed to change options in their policy much more easily than in whole life insurance policy. While the whole life insurance policy only pays out the death benefit when it is collected, it is possible for a universal life policy to pay out either the death benefit or the death benefit plus the cash value, depending on how the policy holder had the policy configured. There are several subtypes of universal life insurance, including variable universal life insurance, equity indexed universal life insurance, interest sensitive universal life insurance, and guaranteed death benefit insurance.
Get a universal life insurance quote here.
-Variable life insurance/Variable universal life insurance(VUL):
While technically a type of universal life insurance, variable universal life insurance has enough differences to validate it's own section for explanation. Variable universal life insurance polices attempt to build cash value in a manner similar to mutlal funds: the cash value can be invested in separate accounts, which are invested in stock or bond markets. Like other universal life insurance policies, the policy holder can adjust the premium he pays in, affecting the value of the policy.
Get a variable life insurance quote here.
-Limited pay life insurance:
Limited pay life insurance is different from the other types in that the premium is payed out over a pre-defined time period, and paid out at a specified time. It is common to pay the premium over the course of ten or twenty years, and then collect the value of the policy at age 65. Unlike term life insurance, limited pay life insurance does not expire at the time the premiums are finished being payed. Click here to learn more about limited pay life insurance.
-Endowments
An endowment is an insurance policy in which the cash value equals the death benefit at a specified age, known as the "endowment age." The pay period is typically much shorter than the pay period for whole life or universal life insurance. Additionally, the policy is paid out at a certain age, regardless of if the policy holder is alive or dead. Endowments are typically much more expensive(per year) than other types of insurance because of this. Click here to price out endowments.
How do I pick what life insurance is best for me?
When picking a life insurance policy, consider your budget, your health, and how much money you think your beneficiaries will need when you're not there to provide for them. It is recommended that you get a few life insurance quotes before committing to a policy.
Tips on shopping for life insurances.
Pick something which fits in your price range. Consider getting quotes from multiple sources before committing to anything.
Where to get life insurance quotes:
Consider getting a quote through one of our partners:
How much does life insurance cost?
That depends on the type of life insurance you are looking to buy, your age and your health. Your status as a smoker is also a factor when determining the cost of a policy.Term life insurance is usually the most affordable, but doesn't come with the additional benefits of whole life, universal life, or variable life insurance. Just follow this link to get a quote.