How Does a Whole Life Insurance Policy Work?

How exactly does a whole life insurance policy work? Whole life policies are popular with some select groups of people but they are a little bit more complex than their plain vanilla easy to understand term life insurance counterparts.

The business of insurance has to be one of the most underrated services offered in the United States nowadays. Not many people think having life insurance is important and because of this we see that the industry is not as successful as the auto and homeowners insurance business. It is important to know however, that death comes at any age; and if a person wants to protect their family or other people after their death it is imperative for them to purchase a life insurance policy.

There are two basic types of life insurance in the United States that work in completely different ways and because of this have different premiums. One of these types of insurances is one that is called a temporary policy. This policy covers a policyholder for about 5 to 30 years and their premiums are most of the time stagnant. On the other hand we have the permanent policy in which members are covered for life as long as they pay all their premiums. Part of your premium will go toward a little saving portion of the policy that will accumulate over time and the other portion of the premium goes towards the insurance cost of the death benefit.

Whole life insurance is one of the three types of insurance polices that you can obtain if you want a permanent life insurance policy. This means that whole life will cover you for life and that your cash value (saving portion) will get higher as time goes by. However, whole life is different in that your cash value is tax deferred until the beneficiary withdraws it and you can also borrow against it.

A person should consider whole life insurance when the need for coverage is lifelong. Whole life may be used as part of your estate planning because it accrues money after a person pays the premiums, as mentioned before. Because premiums for this type of policy are much higher than those of temporary policies, a person must know that this is what they want after all. Whole life is a good choice if you want to make sure that your family or dependents have a good life after your death, and that the transition from the death of a person close to their lives is a close one.

Household Insurance Policy – What Is Covered and Where Are the Gaps

There is a lot of confusion about what an ordinary householders policy covers – all the things people think that they are covered for and are not and on the other hand, all the things they can claim for, and often do not realize they can.

Buy a householders policy which includes the building as well as the contents – otherwise a household fire could cripple your family finances for years.

Gone are the days of fine print exclusions, public opinion has persuaded insurance companies to have print no smaller than normally used in a newspaper. This has now made household insurance companies competing for the consumer dollar never more competitive.

Because of the wide variation in policies, this article is to be taken as a general guide only, raising points to check against your policy where applicable.

Do not take for granted the following points to be covered in your new policy, check first before you sign.

It is wise to check your policy’s renewal cost with what you paid last year, because the insurance company may have increased the premium “to take account of inflation”. Some companies do not make it clear that they have done this.

What is Covered?

Items people can claim for under their normal householder’s policy often do not realize they can! Your householders’ policy not only covers your home – but the entire property including the front garden and the backyard.

This means that you can claim for the theft of everything from the pot plants to the clothes hoist. Many people living in apartments, where clothing has been stolen from washing lines, do not realize that they are also covered for the clothing stolen (whether it is the depreciated or the replacement value depends on the policy).