What Type of Multiple Protection Coverage is Best for You?

Multi-protection life insurance policies provide coverage for a person's entire life. These hybrid policies are combinations of full life insurance and term life insurance in which the amount of coverage is higher in the first years of the policy and lower in recent years. Term insurance provides protection for a specific period of time. This period can be as short as one year or provide coverage for a specific number of years, such as 5, 10, 20 years, or up to a specific age, such as 80 years or, in some cases, up to the oldest age in the life insurance mortality tables.

Policies are sold with several premium guarantees. The longer the warranty, the higher the initial premium. If you die during the term of effect, the company will pay the nominal amount of the policy to your beneficiary. If you live beyond the period of duration you selected, no benefits will be paid. As a general rule, term policies offer a death benefit with no savings element or cash value.

Premiums remain fixed for the specified period of time under the terms of the policy. The premiums you pay for term insurance are lower at younger ages compared to the premiums you pay for permanent insurance, but term rates increase as you age. Term plans can be converted into a permanent insurance plan. The coverage can be uniform and offer the same benefit until the policy expires, or it can have decreasing coverage over the term and the premiums remain the same. If you don't pay the premium on your term insurance policy, it will generally expire with no cash value, unlike a permanent policy that has a cash value component.

Currently, term insurance rates are very competitive and are among the most affordable pure life insurance coverage available. You need to carefully review the terms of the policy to decide which temporary living options are right to meet your particular circumstances. While term insurance is designed to provide protection for a specific period of time, permanent insurance is designed to provide coverage for life. To maintain the level of the premium, the premium at the earliest ages exceeds the real cost of protection. This additional premium creates a reserve (cash value) that helps pay for the policy in later years as the cost of protection exceeds the premium. Whole life insurance policies extend the cost of insurance over a longer period of time to level out costs which would otherwise increase.

Under some policies, premiums must be paid over a certain number of years. In other policies, premiums are paid over the life of the policyholder. The insurance company invests money left over from premiums. You don't have to pay planned premiums but if you pay less, benefits may look more like temporary insurance which is only in effect for a limited time and generates no cash value. On the other hand, if you pay more and your assumptions are realistic it's possible to pay off policy at an early date.

Traditional variable life insurance offers guaranteed minimum death benefit but many universal variable life products do not and if investment experience is poor coverage will be canceled if substantially higher premiums are not paid. Variable living is also available with one-time premium but if investment experience is poor additional premiums will be required. While permanent life insurance is most popular type of life insurance plan tradeoff for lifetime coverage is that permanent insurance costs much more than term insurance. Also known as funeral or burial insurance final expense insurance is type of complete life insurance that offers smaller more affordable death benefit designed to help cover end-of-life expenses such as funeral expenses medical bills or outstanding debts. While this type of policy gives maximum flexibility you'll have to actively manage it to maintain sufficient funding especially since insurance company can increase mortality and expense charges.

Universal life insurance is type of permanent life insurance that allows you to accumulate cash value withdraw funds and you can have basic investment options. Youth insurance provides minimum of protection and may provide coverage which may not be available at later date. A family policy is combined plan that provides insurance protection under single contract to all members of immediate family (husband wife and children). While other types of life insurance may have age and health requirements final expense policies may be easier for older or less healthy people to apply for. There is also specific type of complete life insurance called final expense insurance or burial insurance that is intended to cover end-of-life expenses. If you give up universal life policy you may receive amount lower than cash value of account due to cancellation fees which can be two types. As type of permanent life insurance comprehensive life insurance provides coverage for entire life and pays benefit no matter when you die as long as you continue to pay bill.

Sometimes known as burial insurance this type of life insurance plan covers some costs that your loved ones would otherwise have to pay after your death. Universal life insurance contains savings component with different types of products that offer different ways investing money. Periodically company deducts from cash value account its expenses and cost of protection which is generally described as mortality deduction fee. So what type of multiple protection coverage is best for you? The short answer is that it depends on your needs and financial plans. When you apply for loan from organization that has group credit and life policy organization may require you to purchase credit life insurance or simply offer...

Carl Somilleda
Carl Somilleda

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