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Life insurance is one of the many types of insurance you can purchase. Life insurance is one that will pay a monetary amount as written in the insurance policy upon the death of the insured individual. As long as the premiums are kept current and paid on time the policy will stay in affect.

The life insurance policy is a contract between the name insured and the insurance company to pay that amount of money to the designated beneficiary up on the death of the name insured.

Reasons for a Life Insurance Policy

There are many different reasons why people are going to take out a life insurance policy. The life insurance policy while it does nothing for the person named in it will be purchased to provide security to their family upon their death.

For example, nobody expects to die early but should the working parent, or the primary wage earner end up dying unexpectedly, the death benefit received from the policy will allow the family members left behind to at least overcome the financial burden of the heartbreaking loss.

Life insurance can be purchased either by an individual or is a benefit offered to employees with most employers benefit packages. Some of the larger companies or government employees will be offered this group life insurance at no out of pocket cost.

Should you have group life insurance and would like to purchase more you can and you can usually do so at reduced rates since this would be a supplemental life insurance policy.

The Cost of Life Insurance

The cost of life insurance is a difficult one to answer as it’d dependent on many factors. Some of these factors are going to include the insured’s:

• Age
• Overall health
• Occupation

A couple of examples of this are:

1. 20 year old male that is a non-smoker and in excellent health. 60 year old male that is a smoker and in average health. The premium for the 20 year old non-smoker is going to be much less based upon age and the overall health.
2. Any age librarian and a skydiving instructor.  The librarian in this example will have a much lower premium than the sky diving instructor due to the nature of the jobs.

Just like with any other type of insurance the insurance underwriters are going to look at and assess the risk before assessing the premium for the insurance policy. With someone that is in poor health or works in a dangerous field the premiums are going to be higher as they are likely to pay out a lot sooner than they would for a healthy individual or one that works in a safe job. Risk assessment plays a huge part in the determination of policies and premiums.

Forms of Life Insurance

Life insurance will come in many different forms that will help it to fit the tastes of all the potential insured’s. Some of the more typical forms of life insurance are going to be:

• Whole life
• Variable life
• Term life

Term Life

Term life is an insurance policy that will begin with a lower premium during the initial stages of the policy and those premiums will go up at a steady rate as the insured grows older. A term life policy has no cash buildup and the death benefit that’s provided will not increase over time.

Whole Life and Variable Life

The whole life and the variable life policies will have a portion of each premium to pay for the insurance and the rest works as an investment, tax free.

The whole life policy is going to set a specific premium at the beginning of the policy and the premium will not change during the entire life of the policy. The nature of this policy is going to allow for the cash to buildup during the course of the insured’s life. The cash buildup can be used during the course of the policy if desired or it will simply increase the payout death benefit.

The variable life policy will have a premium that will remain the same over the life of the policy as well. The variable life policy will also have a cash buildup; however, with the variable life policy the insured will select various mutual funds and the cash buildup will be affected by how well the selected mutual funds perform.