William Penn Life, 2000 (35. évfolyam, 1-12. szám)
2000-06-01 / 6. szám
What is the right kind of insurance? From the Pennsylvania Insurance Department Life Insurance Buyers Guide All life insurance policies stipulate an amount to be paid to your beneficiaries when you die; however, all policies are not the same. Some provide permanent coverage and others temporary coverage. Some build cash values and others do not. Some policies combine different kinds of insurance while others let you change from one kind of insurance to another. Your choice should be based on your needs and what you can afford. A wide variety of plans are offered today. Here is a brief description of the basic kinds of life insurance: TERM INSURANCE covers you for a set period (term) of one or more years. It pays a death benefit only if you die during that term. Term insurance generally provides the largest immediate death protection for your premium dollar. Most term insurance policies are renewable for one or more additional terms even if your health status has changed. Each time you renew the policy, premiums will be higher. Check the premiums at older ages and how long the policy can be continued. Many term policies can be converted before the end of a certain period of time for a whole life policy—even if you are not in good health. Premiums for the converted policy will be higher than you had been paying for the term insurance. WHOLE LIFE Insurance protects you for as long as you live. With the most common type, called straight life or ordinary life insurance, you pay the same premiums for as long as you live. These premiums may be several times higher than you would pay initially for the same amount of term insurance. But whole life premiums are smaller than the term insurance premiums you would eventually pay if you were to keep renewing term policy until your later years. Some whole life policies let you pay premiums for a shorter period such as 20 years, or until age 65. Premiums for these policies are higher than ordinary life insurance premiums since the premium payments are squeezed into a shorter period. Whole life policies develop cash values. If you stop paying premiums, you can take the cash—or you can use the cash value to buy continuing insurance protection for a limited time or a reduced benefit. You may borrow against the cash value by taking a policy loan. The loan principal and any unpaid interest on the loan will be deducted from the benefits if you die, or from the cash value if you stop paying premiums. COMBINATIONS. You can combine different kinds of insurance. For example, you can buy whole life insurance for lifetime coverage and add term insurance for the period of your greatest insurance need. Usually the term insurance covers your life, but it also can be bought for your spouse or children. ENDOWMENT Insurance policies pay a sum or income to you if you live to a certain age. If you die before the specified age, the death benefit is paid to the person you named as the beneficiary. UNIVERSAL LIFE is a type of policy where the premiums you pay, less expense charges, are deposited into a policy account that earns interest. Charges for the insurance are deducted from the account. Insurance continues as long as there is enough money in the account to pay the charges for the insurance. The cash value depends on the interest earnings which change with market rates. Flexible premium universal life policies let you vary the death benefit and you can vary your premium payments or skip payments if you wish. VARIABLE LIFE is a kind of insurance where the death benefits and cash values depend upon the performance of the investments, such as stocks and bonds, underlying the policy. These policies are so investment dependent, they can only be sold by an agent registered as a securities dealer. Be sure to request the prospectus provided by the company when buying this kind of poücy- EH] Money Links To learn more about life insurance, the types of life insurance available, and which types may best suit your needs, contact your local WPA representative, or call our Home Office toll-free at I - 800-848-7366. On the Internet you can also find useful information about life insurance on the Consumer Information page of the Pennsylvania Insurance Department, located at: 0 www.insuranee.state.pa.us 4 Willi» Pen Lite, June 2000
