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Several Clauses Within Life Insurance

by

Herbert Burnett

As an applicant, if you lie on any of the details necessary on the application form, the life insurance provider is eligible to refuse you any payout. You are also not entitled to receive anything for the life insurance company if you have committed suicide or have been murdered by a beneficiary. Also, as an applicant, you will be required to supply some pretty personal details about your life and medical history and though there\’s strict confidentiality codes imposed on the insurance company, you may feel uncomfortable about exposing them. Yet, they are a necessary aspect when it comes to determining your premium amount.

Added Benefits Of Life Insurance

Permanent life insurance coverage will last for the entire lifetime of the insured individual, contingent on the policyholder making timely premium payments. The policyholder may be the insured party, or the beneficiary of the policy. A permanent life insurance policy can be a Whole Life Insurance Policy, a Universal Life Insurance Policy or a Variable Life Insurance Policy.

Whole life insurance is a permanent life insurance policy that is ideal for consumers who\’re capable of paying consistent premiums in exchange for the guarantee that the recipients will receive a death benefit that has a savings component. A part of the premium that is paid by the policyholder accumulates over time and earns interest. The remaining premium goes towards insurance coverage. The face value of the whole life insurance policy and the cash value are not the same. The former refers to the amount of insurance purchased, while the latter is the accumulated savings that can be accessed by the policyholder.

In case of a whole life insurance policy, the cash surrender value of the policy becomes available even before the death of the insured. This is made possible by the cash accumulation component associated with whole life insurance. Cash value is the amount that is available on cancelling the insurance policy before the policy matures, or the payout becomes imminent on account of the demise of the insured. The policy requires the policyholder to pay a high premium in the beginning. The amount of premium that is paid is directly proportional to the age of the insured person. The premium is typically deposited in a high interest bank account. The premium earns tax-deferred interest over time, or in other words, it accumulates cash value.

The amount that is accumulated can benefit the policyholder in the following ways: Asset: Since whole life insurance accumulates cash value, the policyholder can choose to surrender the policy and receive the amount of cash benefit. In other words, this policy functions as an asset for the policyholder as well as the beneficiary. The latter is guaranteed a death benefit, while the former can encash the investment. Loan: The policyholder may choose to borrow against the accumulated cash value. The borrower must ensure that the loan is repaid; otherwise the dues are settled by reducing the amount of death benefit. Dividends: The interest may be used in lieu of further premium payments, or the policy holder may choose to receive the money in the form of cash dividends. The policyholder may also choose to use the dividends to buy additional coverage.

It\’s evident that whole life insurance offers a number of benefits to the policyholder, in addition to helping the beneficiary.

It\’s evident that whole

life insurance

provides a number of advantages to the policyholder, in addition to helping the beneficiary. People who are unable to acquire term life insurance on account of advancing age might be able to purchase a whole life insurance policy, since the latter requires the policyholder to pay a much higher premium than a

term life insurance

policy.

Article Source:

ArticleRich.com