A life insurance policy is meant to provide financial security and support in the event of a tragedy. It ensures that your family does not have to depend on a third party for their financial needs in your absence.
When it comes to life insurance policies, you have a wide range of options to choose from, each of which provides you with a specific type of coverage and may vary in terms of being the best fit for one person or another. So, before buying a policy, it is important to compare the different options available and choose a policy that fits into your budget and meets your life insurance needs.
Different Types of Life Insurance Coverage Available
Term Life
This type of coverage is designed to last for a specific period of time, after which it expires or becomes completely unaffordable. If you die – either as a result of an illness or in an accident – while your policy is in force, your family will be paid a sum of money, which is commonly referred to as your policy’s face value or death benefit.
Term life is the most affordable and the least complicated type of coverage you can buy. Still, some insurers are known to deny or delay claims from time to time. In such cases, an experienced life insurance attorney can recover the amount you are owed from the insurance company through negotiation or litigation.
Whole Life
This type of coverage is designed to last until your death. It expires only if the required premiums are not paid. Every time you pay the premium, the policy’s cash value grows. In addition, dividends are paid which can be used to increase the face amount. When you die, your family will be paid your policy’s face value, which will ordinarily be greater than the initial amount. You can also borrow money or withdraw cash from a whole life policy.
Whole life policy documents can be extremely complicated for the average person to read and understand. So, if your claim is denied by your insurance company, or if there are any other issues, you should contact a life insurance claims attorney who can help you to resolve those issues and necessary, file suit to recover the amount you are owed.
Universal Life
This is a cash value policy but differs significantly from a whole life policy because neither the premiums nor the interest is guaranteed; therefore, it may be necessary at some point to increase the premium payments in order to keep the death benefit in force.
Variable Universal Life
These policies are extremely complex combinations of life insurance and investments in mutual fund-like instruments that rise and fall with the performance of underlying securities. The cash value portion of the policy does not grow in value at a fixed rate. Instead, it can be invested in a variety of accounts. So, if the market performs well, the policy will accumulate cash value rapidly. If it declines, the policy’s cash value will drop significantly and you may have to deposit more funds to keep the policy in force.
Due to their volatility, variable universal life insurance policies are not a good choice for risk-averse people, especially if they are older people. If an agent or broker advises you to buy a variable life policy – by making misleading claims or by deliberately refusing to explain the risks involved – you may be able to take legal action against them with the help of a life insurance lawyer.
Simplified Issue
This type of coverage is meant for people who do not want to undergo a paramedical exam. You only need to answer a set of questions related to your health and lifestyle. The downside is that these policies tend to be more expensive than regular life insurance policies. In addition, during the first two years, they are subject to post-claims underwriting, which will delay the payment of the claim. Any material undisclosed condition will result in the claim being denied.
Guaranteed Issue and Group Life
Guaranteed issue life insurance is meant for people who are unable to buy regular life insurance policies due to their age or health condition. If you can afford to pay the premium, you will be issued a policy – no questions asked. However, many of these policies have graded benefits, i.e. if you die within the first five years, your beneficiary will receive less than the face amount.
Many group life policies issued through employment are also guaranteed issue. Such policies have special features that you need to understand before applying for them, and they are subject to completely different rules in case of disputes.
Final Expense
This type of coverage is meant to pay for your funeral expenses. Premiums tend to be very high for the amount of benefit.
UNDERSTAND THE DIFFERENCES BEFORE YOU BUY.
Cut Through Life Insurance Confusion With An Experienced Life Insurance Attorney
Benjamin Blakeman has more than 40 years’ experience as a lawyer, over 20 years’ experience with life insurance, and 11-plus years as a certified mediator. He also has direct experience selling life insurance. He understands the life insurance and can provide you expert legal advice on life insurance, annuities, and financial elder abuse.
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