The average person on the street assumes that life insurance and life insurance are the names of the same type of insurance. How wrong you are! But don’t be shy, lots of financial commentators are wrong too!
Life insurance and life insurance play distinct and separate financial roles in terms of costs. Here’s how to help find the right product. If you want to get the best life insurance service then you can pop over to this website.
Life insurance provides you with protection for a specified period of time (known as a “term” policy). Then, if you have to die when the policy is in effect, the insurance company will pay the amount tax free. If you hold on to the end of the term, the policy is over and there is no residual value. It’s only worth claiming – it’s like your car insurance in this context!
Life insurance is different. It is a hybrid combination between investment and insurance. Life insurance pays an amount equal to or greater than the minimum guaranteed amount as stipulated in the insurance terms of the policy or asset rating.
Then the value of the investment element depends on the investment efficiency of the insurance company and the length of time for the premium payment.
Each year the insurance company adds an annual bonus to the coverage of your insurance policy, and there is usually an additional “terminal bonus” at the end. Therefore, over time, the value of your life insurance will increase along with the increase in investment premiums.
The premium value is then determined by the insurance company’s investment return. Once the assets are assigned to the policy, you can redeem them with the insurance company. However, most people get a much better price for their insurance policy by selling it to a specialist investment broker than paying with an insurance company.
If you have to die while taking out life insurance, the policy pays a higher or guaranteed minimum amount or the cumulative value of the annual investment premium. However, if you are still alive after the policy ends, you will usually get a higher payout. This is because most insurance companies provide additional terminal bonuses.
There is also a special type of life insurance called Lifetime. These rules remain in effect as long as you live and, therefore, do not have predetermined deadlines.
There are also practical differences for internet users. While you can purchase life insurance online, financial service authorities view life insurance as a basic investment product. For this reason, they feel they are better off being sold by a financial advisor with advice based on that advisor’s full understanding of your personal information.