Life insurance is a risk protection product that’s typically not purchased best until a consumer understands that they will never reap the benefits of the product, but special people in their life will. The decision to purchase this these products comes after you’ve considered and planned to protect your business or the ones you care about most, from the financial impact that would ensue, in the event of your death. Once that understanding is reached, consumers are better able to zero in on the type of product that best suits their needs. Below is a summary of the more prevalent products and policy attachments, also known as “riders”, which amend the original product in some way.
Term Products: They are sold in increments of time from 10, 20, to 30 years and the concept is quite simple. As long as your premiums are paid, they will insure you, according to your agreement, until the end of the specified period of time or “term”.
Universal Life: This is a type of cash value life insurance policy, which is sold primarily in the United States of America. Under the terms of the policy, the excess of premium payments above the current cost of insurance is credited to the cash value of the policy.
Benefit Amount: This is the amount of money your designated beneficiary will receive in the event the individual that’s insured passed away.
Beneficiary: The person(s) designated to receive the benefit amount in the event the insured passes away. Typically set up with a primary and a secondary person.
Guaranteed Renewability: This is a policy rider that ensures that at the conclusion of the set term of insurance and regardless of the health status of the insured, the carrier will offer the renew coverage for an additional number of years.
Child Rider: If selected, allows the insured to also insure their children on the same policy.
Return of Premium: At the conclusion of the “term” of coverage, if the insured is still alive then every dollar of paid insurance premiums will be returned to the insured.
Accidental Death or Double Indemnity Rider: In the event the insured dies, as a result of an accident, the carrier pays an additional amount, which is above and beyond the benefit amount.
Accelerated Death Benefit: The insured may receive from 25-40% of the benefit amount if they’ve been diagnosed with a terminal illness that is certain to shorten their lifespan.
Whole Life: As opposed to a set “term” that you are insured, this product covers you to age 100 or 110. This product can also be used as an investment vehicle, as your premiums are allowed to accumulate cash value.