Show Life insurance is a form of insurance that pays a beneficiary in the event of the death of the insured person. When a policy is purchased, a specific death benefit is chosen.
Having young children is a common reason to purchase life insurance. Do you need Life Insurance?If you provide financial support, or provide such services as child care, cooking, and cleaning for your family, life insurance can help replace those contributions to the family if you should die. Older couples also may consider life insurance to protect a surviving spouse against the possibility of the couple’s retirement savings being depleted by unexpected medical costs. If there are people who depend on you financially (including children, a spouse, a business partner, disabled or elderly relatives), having a life insurance policy will protect them when they can no longer count on your earnings. If you have a mortgage or other financial obligations, a life insurance policy can help pay off debts and provide living expenses to the people you name as beneficiaries. A key question to ask yourself is:Are there people who depend on me financially? If so, life insurance can provide for their needs if you should die.For most people, the need for life insurance will be highest after starting a family and will decrease over time as children grow up and become independent. Life insurance can help make sure future needs are met and that your family maintains its standard of living, no matter what life brings. How much Life Insurance is enough?Multiply your family’s annual expenses, allowing for inflation, using the number of years in the future you believe your dependents would need your support. Remember to include the future costs of items you want to pay for such as a mortgage or educational expenses. Some options to consider: How long will any children remain at home and be supported? What are possible education costs for dependents, whether a child or an adult who might need to enter the workforce after the death of the primary provider? Do you want to cover mortgage or vehicle payoff costs? Some advisors recommend an amount of life insurance that equals or exceeds two to six times the annual income of the policyholder. However, this figure should be What are different types of Life Insurance?The primary purpose of life insurance is to provide for dependents should the family provider die. However, there are differences in types of insurance that allow different benefits and risks. Some types of life insurance are for a specific “term” or period of time. Some types of life insurance include the accumulation of cash value in exchange for a higher premium. The next sections describe the differences between basic types of life insurance, as well as how to determine who should be insured. The three main categories of life insurance are term life, whole life, and universal life, although there are options within each category: Term life insuranceTerm life insurance is the simplest and least expensive type of policy, with no cash value. A term life policy has only one function: to pay a specific lump sum to the beneficiary that has been designated, upon a
specific event: the death of the insured person. The death benefit and the policy limit are the same — for example, a $200,000 policy pays a $200,000 death benefit. The policy protects your family by providing money to replace your salary, income or other contributions, as well as covering final expenses incurred at death. Whole life insuranceOther types of life insurance provide both a death benefit and a cash value. Their premiums are higher than term life premiums, because they
fund the cash value account in addition to providing insurance. These policies are often referred to as cash value policies. Universal life insuranceDifferent types of life insurance meet the needs for people in various stages of life. People should review insurance coverage and, when necessary, change the type of policy as their needs change. Should I buy Life Insurance for my children or for my parents?The main reason to take out a life insurance policy is to replace income should the insured person die. Life insurance helps replace the lost income or services that the insured person provided to the family. Should a stay-at-home spouse have Life Insurance?If a stay-at-home partner dies, the survivor may have to pay someone to take over childcare, laundry, cleaning, cooking and other tasks. For additional information on purchasing Life Insurance, Health Insurance or Annuities, please visit the National Association of Insurance Commissioners (NAIC) website. Which option of universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured? Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases.
What is death benefit option 2?Death Benefit Option 2
Provides a fluctuating death benefit that equals the face amount of your policy plus the policy's cash value, so the total benefit amount is based—in part—on the potential growth of your policy.
What are the death benefit options?Generally, three types of death benefits options are available to holders of variable universal life insurance policies. They include level death benefit, return of premium benefit, and variable death benefit.
Do you get both death and cash value?Do beneficiaries get the cash value and the death benefit? Most of the time, no — the cash value can only be used while you, the policyholder, are alive. The cash value remains completely separate from the death benefit, and cannot be accessed by your beneficiaries, even when you die.
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