Originally seguros de vida started as temporary policies valid for one year only. To remain protected one had to buy a fresh policy every year. However, such an arrangement had two major defects: * Since the policy prices increase with age, after few years, these policies became financially unviable for most. However, to counter such disadvantages, level term life policies were introduced. We will talk about that later. * If in the mean time, the insured developed some terminal diseases, the insurer refused to provide the coverage. This in other words meant that in spite of paying the premium all his life, one had a great chance of dying uninsured. To offset such a possibility, policies with compulsory renewal clauses were introduced.
Level term policies are nothing but plain term life insurance; but instead of one year these policies are sold for 5/10/15/20/25/30 years. Under this policy, the premium remained same for the entire term and so buying the policy early in the life is more prudent; what is more to get the most out of it, you should make sure that the policies cover the entire vulnerable period of your life. If indeed, you have to buy fresh coverage later in life, you will be required to pay at a very high rate.
Buying a term life is cheap if you determine how long you will be taking the policy for. This is the reason why many prefer the insurance whole policy. The death benefit of this policy is payable whenever the insurer dies as this policy covers the whole life of the insurer. Another good part of this is that if you create a cash reserve to which interest will be regularly credited along with the usually death benefit.
The the only question is "is it as beneficial as it is made to be?" We have the experts who still argue about this. Some believe that nobody needs the coverage for life so the life long validity is not at an issue. As far as the cash value build up, you get this because you pay extra for that.
Nonetheless, as far as market demand goes, the whole life policies far outweigh term life in their popularity. However, the seguros de vida whole,is not the only policy which provides life long coverage along with scope for cash value build up; a universal life insurance too do that. In fact, the later is often perceived as an improvement upon the whole life policies because it offers more flexibility in premium payment; if you cannot pay the premium, the policy will simply subtract the amount from the cash reserve. Moreover, the death benefits too can be altered easily under a universal life while that is fixed under a whole life.
There can be a defraud side to this as well. In the whole life insurance the death benefit is guaranteed as long as every premium is paid on time. However the in the universal life policy there is a risk for maintaining the death benefit of the policyholder. A policy can lapse of the market goes down or if there if the fund managers fails to do their job, well this will lead you to losing every penny you saved.
There are companies that offer "No Lapse Guarantee" riders and if you buy this with the original policy it will remain active for the guarantee period even if the cash value drops to zero. Many people prefer the seguros de vida universal, because there is transparency and the return is much higher. Though is illegal many brokers advertize that there is a tax benefit for this policy. Yet there are some who promote this an alternative to Roth IRA and other tools.
Actually, the seguros de vida, as an industry, is forever on the path of evolution. As time changes, the financial requirement of the society also changes. To survive in this ever changing world, the insurers have to constantly update themselves. As a result we today have different types of policies to cater to the different needs of their clients. If you want to have the best out of your money, you will have to go through each of them to see which one suits you more. Alternatively, get hold of a knowledgeable broker and have an in-depth session with him. To my mind, that is the better alternative.
Level term policies are nothing but plain term life insurance; but instead of one year these policies are sold for 5/10/15/20/25/30 years. Under this policy, the premium remained same for the entire term and so buying the policy early in the life is more prudent; what is more to get the most out of it, you should make sure that the policies cover the entire vulnerable period of your life. If indeed, you have to buy fresh coverage later in life, you will be required to pay at a very high rate.
Buying a term life is cheap if you determine how long you will be taking the policy for. This is the reason why many prefer the insurance whole policy. The death benefit of this policy is payable whenever the insurer dies as this policy covers the whole life of the insurer. Another good part of this is that if you create a cash reserve to which interest will be regularly credited along with the usually death benefit.
The the only question is "is it as beneficial as it is made to be?" We have the experts who still argue about this. Some believe that nobody needs the coverage for life so the life long validity is not at an issue. As far as the cash value build up, you get this because you pay extra for that.
Nonetheless, as far as market demand goes, the whole life policies far outweigh term life in their popularity. However, the seguros de vida whole,is not the only policy which provides life long coverage along with scope for cash value build up; a universal life insurance too do that. In fact, the later is often perceived as an improvement upon the whole life policies because it offers more flexibility in premium payment; if you cannot pay the premium, the policy will simply subtract the amount from the cash reserve. Moreover, the death benefits too can be altered easily under a universal life while that is fixed under a whole life.
There can be a defraud side to this as well. In the whole life insurance the death benefit is guaranteed as long as every premium is paid on time. However the in the universal life policy there is a risk for maintaining the death benefit of the policyholder. A policy can lapse of the market goes down or if there if the fund managers fails to do their job, well this will lead you to losing every penny you saved.
There are companies that offer "No Lapse Guarantee" riders and if you buy this with the original policy it will remain active for the guarantee period even if the cash value drops to zero. Many people prefer the seguros de vida universal, because there is transparency and the return is much higher. Though is illegal many brokers advertize that there is a tax benefit for this policy. Yet there are some who promote this an alternative to Roth IRA and other tools.
Actually, the seguros de vida, as an industry, is forever on the path of evolution. As time changes, the financial requirement of the society also changes. To survive in this ever changing world, the insurers have to constantly update themselves. As a result we today have different types of policies to cater to the different needs of their clients. If you want to have the best out of your money, you will have to go through each of them to see which one suits you more. Alternatively, get hold of a knowledgeable broker and have an in-depth session with him. To my mind, that is the better alternative.
About the Author:
Article by David Livingston of EQuote, who is a specialist in everything life insurance. For more information on aarp life insurance and no medical term life insurance rates, visit his site today.
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