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Life Insurance

Three Types Of Life Insurance And How They Work Most people have the basic knowledge of how life insurance works. The main thing to understand is that when someone dies, the life insurance is paid out. The reason for the purchase of life insurance is very simple. People need to be prepared for the unexpected to happen. There can be a significant loss in financial support when a loved one dies. Life insurance helps people to supplement for the loss they have suffered. There are three basic types of life insurance. These three are term, whole and universal. Term life insurance is also known by a different name. It is often referred to as the “pure” life insurance. It is given this name because it will only pay out the benefit listed in the policy if the person dies within a set time period or term. If the person does not die within that time frame, then none of the premiums that were paid in will be returned to the policyholder. These policies are usually low premium and are renewable and convertible. Whole life insurance is different than term life insurance in that it has no set time frame or term. As long as the premiums are paid to the insurance company, then the death benefit will be provided for the entire or whole life of the insured. A whole life insurance policy also has another added benefit. It has an investment component. This allows the policy to accumulate a cash value over time. The insured person can then withdraw or borrow against this accumulated value over the course of their life. The only downfall to this form of investing is that it offers a very low rate of return. The person should put much thought into investing in this manner.
Universal life insurance policies have a cash value. This value is based on short- term interest rates. It is not determined by a stated long-term rate like in a whole life policy. If there are premium payments made to the policy that are in excess of the cost of the insurance, then this amount is added to an interest- bearing account. The interest rate on this policy can fluctuate, but the good thing is the rate cannot fall before a certain guaranteed rate set by the insurance company. There are many pros and cons to each of these insurance types. Before a person comes to a final decision on which type is best for them, they should consult with a professional with much understanding on the matter. This is a very important decision that is made and much thought should be given to it. This decision may affect the survival of the person after the death of a loved one. It may also affect how that person’s loved one will survive without them. For more information on life insurance or to get a quote, come visit us at 2456 Brannon Avenue, or call us at 514-877-2672.
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Life Insurance

Life Insurance

Three Types Of Life Insurance And How They Work Most people have the basic knowledge of how life insurance works. The main thing to understand is that when someone dies, the life insurance is paid out. The reason for the purchase of life insurance is very simple. People need to be prepared for the unexpected to happen. There can be a significant loss in financial support when a loved one dies. Life insurance helps people to supplement for the loss they have suffered. There are three basic types of life insurance. These three are term, whole and universal. Term life insurance is also known by a different name. It is often referred to as the “pure” life insurance. It is given this name because it will only pay out the benefit listed in the policy if the person dies within a set time period or term. If the person does not die within that time frame, then none of the premiums that were paid in will be returned to the policyholder. These policies are usually low premium and are renewable and convertible. Whole life insurance is different than term life insurance in that it has no set time frame or term. As long as the premiums are paid to the insurance company, then the death benefit will be provided for the entire or whole life of the insured. A whole life insurance policy also has another added benefit. It has an investment component. This allows the policy to accumulate a cash value over time. The insured person can then withdraw or borrow against this accumulated value over the course of their life. The only downfall to this form of investing is that it offers a very low rate of return. The person should put much thought into investing in this manner.
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Universal life insurance policies have a cash value. This value is based on short-term interest rates. It is not determined by a stated long-term rate like in a whole life policy. If there are premium payments made to the policy that are in excess of the cost of the insurance, then this amount is added to an interest- bearing account. The interest rate on this policy can fluctuate, but the good thing is the rate cannot fall before a certain guaranteed rate set by the insurance company. There are many pros and cons to each of these insurance types. Before a person comes to a final decision on which type is best for them, they should consult with a professional with much understanding on the matter. This is a very important decision that is made and much thought should be given to it. This decision may affect the survival of the person after the death of a loved one. It may also affect how that person’s loved one will survive without them. For more information on life insurance or to get a quote, come visit us at 2456 Brannon Avenue, or call us at 514-877- 2672.