Whole life insurance is the most common form of cash value insurance policy. It bundles death protection with cash value accumulation.
An overview of some of the characteristics, details and choices with whole life policies.
Cash value life insurance policies differ from term policies in many ways. The major differences are that cash value policies offer permanence and cash value accumulation in addition to death protection. It is very important to understand how this cash value aspect works so as not to be misled.
Cash value life insurance policies differ from term policies in many ways. There are also several different types of cash value policies, resulting in much more variety. Though not all are unique to cash value policies, it is important to recognize their significance and identify which features are attractive to you.
Term insurance is the most basic type of life insurance. It is a pure protection policy in that it only provides death benefit and accumulates no cash value.
Term life insurance policies can vary greatly depending on which options and features are selected. This allows the ability to customize a policy depending in the specific needs of the individual or family.
Risk is uncertainty. Risk is the variability around an expected outcome. The larger the variability, the higher the uncertainty, the larger the risk. Risk is pervasive. Most activities involve some sort of risk. Our goal is the minimize the cost of risk.
Insurance can be divided into two groups, indemnity and non-indemnity. Learn the difference between these two groups of insurance.
Insolvency risk refers to the possibility that an insurance company is unable to meet its financial obligations.
Both types of insurance policies, term and cash value, can act as either participating or non-participating (par or non-par, respectively). Most policies are par policies.
We’ve mentioned that we cannot place a value on human life. It is important to understand that though we cannot readily assess the value of a human life, we do put a price on it in different ways, some more direct than others.
Insurance is a broad and complex topic, but in essence a simple concept. Insurance is about the management of risk. When buying insurance, we’re paying to convert an uncertainty into a certainty. The goal of insurance is to minimize the cost of risk. [Read more…] about Introduction to Insurance