Life insurance - is a very important moment in the life of any family. Program for life insurance are: individual, concluded directly with insurance companies (Life Insurance), the Group entered into an organization with insurance companies for their employees (Group Insurance), by accident. The sum insured is payable only by accident (Accidental Life Insurance).
All individual insurance programs can be divided into two types - temporary and permanent. In order to sort out insurance, let us imagine that such a temporary and permanent housing. Temporary housing - rent a flat. Need flat (shelter) - we pay for this apartment. Need 5 years - 5 years pay. We raise the rent - we pay. Do not need in the futureapartment - we will not pay. Eaten at any time, but the money for this apartment will never be able to return. All, of course, understand the difference between an apartment and rented a house.During their homes to pay each month has more than due to the debt (mortgage),but at any time, you can sell the house, debts and distribute will still be money. The later sell the house, the more money.
Just as happens with the insurance programs. Temporary insurance programscovering temporary insurance needs. Persistent - continuing needs. Temporaryinsurance are very cheap and paid for 1 month in advance. If you need insurance - we pay for it. If you no longer need - stop paying. It's very simple. The advantage of this type of insurance is that for a little money can have a large amount of coverage.
The disadvantages of such a program are obvious: the cost of insurance varies with time and it lasts only until a certain age. Typically, up to 75 years, some companies up to 85 years. Consider this example: a man, a non-smoker, 40 years old. Has a $ 200,000insurance. Today, he pays $ 22. After 10 years, will have to pay $ 105, even after 10 years - $ 251, then $ 625 and the last payment will be $ 1.523 per month. Of course, nobody is going to pay that kind of money the company. And the price is calculated on the man, whose health has deteriorated and can notmake the same contract but with a more attractive price. After all, if after 10 yearsagain, to answer any medical questions, ie virtually re-do the insurance, the price isnot $ 105, and $ 42 per month. Thus, insurance companies are building a temporary condition of insurance that a person after a certain period, in this example 10 years, will break the contract, and all profits stay with the company. If a person is healthy, he will do the same insurance for a new, if not healthy, it willpay the proposed price (which is also profitable for the company) or move to a permanent type of insurance where monthly payments are no longer rising.
When it comes time to buy temporary insurance, then there is the problem of comparing the proposed prices for the same coverage (ie $ 200,000).
I'll try to tell you how you can compare these insurance programs. The cost of the temporary insurance rises after a certain period of time. It is necessary that this period was the same, say, 10 years old. Insurance should last until a certain age (75-85 years), and not only operate for the next 10-20 years, and the contract should be written that 65 years is entitled to move to permanent insurance without medical questions (convertion period) . If this condition is not, the insurance will cost a little bit cheaper, but this condition isimportant. If we choose the time coverage with the ability to transition to permanentin the future, it is necessary that the company could offer a person at the time oftransition a certain variety of permanent insurance programs and good prices. Thiscan offer a large, solid company that feels confident in the market as a "temporaryinsurance programs" and the "permanent insurance", so this factor also plays an important role in choosing an insurance company.
The name "Permanent insurance program" speaks for itself. This is insurance for the long term. The cost of higher today than at the time, but it does not change with time, and she has no insurance age limits - the contract is valid until the end of life.That is, the amount of insurance will be paid in the future, always!
So, insurance is more constant. The insurance company receives the money,invest it and part of the profit as dividends, at the expense of putting in an insurance contract, ie each year within the insurance savings grow. For convenience, these savings can be called a reserve fund.
There is another option of permanent insurance. They are called universal.Universal insurance - this is the same constant insurance, which has no age limitand where there are savings. In the universal insurance there are no dividends. It employs the principle of "BUY TERM INVEST DIFFERENCE" (buy temporaryinsurance and invest the difference). Part of the money from the monthly paymentgoes to pay for insurance (insurance risk), and the rest goes directly to the reserve. Money in the reserve are working in the market and generate revenue every day,not taxable. In the universal insurance clearly highlighted the value of the insurance risk for the company, which is the usual time yavyaetsya insurance. What kind ofinsurance they took temporary basis for a universal contract depends on the formof universal coverage.
In the 1st form of the cost of insurance risk for the company (Cost of Insurance)taken in the form of temporary insurance, which costs will increase each year (YRT - Yearly Renewable Term), or steps in the future. In the 2nd form of the cost ofinsurance risk is presented in the form of temporary insurance of up to 100 years (T-100), in which the cost of this temporary insurance is determined at the time ofsigning the contract and does not change with age. The first option is paid a certain sum each month, for example, $ 100, whichamounts to much more than the actual cost of insurance today.
