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Life Insurance FAQs

What is Life Insurance?

Life insurance is a financial resource for your family and loved ones in case of your death. It is a contract between you and an insurance company in which the company provides your beneficiary(ies) with a certain amount of money upon your death. In return, you make periodic payments (premiums) in an amount that depends on medical history, age, gender, and occupation.

What is Term Life Insurance?

Term is the simplest form of life insurance, it is the least expense and least complicated form of life insurance. Coverage is for a fixed amount of time, usually 1 to 30 years, and the beneficiary receives a fixed sum if the insured dies during the term. At the end of the term the policy expires and coverage ceased; however, term life insurance can be renewed. Term life is the a good choice for individuals who who are looking for temporary coverage.

What is Whole Life Insurance?

Provides both a death benefit and a dividend. A fixed premium is charged over the length of the contract. Over time the policy increases in tax deferred value. Most policies provide a dividend to the policy holders which helps with retirement.

What is Universal Life Insurance?

The most flexible plan. The policy holder is able to adjust the benefit/premium mix to best serve their current financial needs, within the limits set by the policy. The payout is the accumulated value of the policy at time of death. One added benefit of a Universal policy is the ability to skip payments if the need arises.

What is Variable Life Insurance?

Allows the policy holder to tie the accumulated value of their policy to the financial markets. While these policy enable a higher return, they also increase risk as down markets occur. You can borrow against a variable policy.

What are Premiums?

Premiums are the periodic payments (Usually monthly or quarterly) that the policy holder pays to the insurance company to purchase and keep a policy in force.

How can I conserve costs with regards to life insurance?

Listed below are some simple ways to decrease the amount you spend on life insurance.

Buy only the amount of insurance that you need to protect your loved ones. Agents will tend to sell you more insurance than you need because their income is generally commission based.
Shop around. There are many links to both agents and insurers, the more quotes you obtain the more likely you are to make and informed decision.
Don't use tobacco products, exercise, and maintain a reasonable weight.
Discuss each of the additional riders with your agent before agreeing to them, most people do not need all the riders that come with basic plans.

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This information was derived from an article on