When it comes to buying life insurance, there are many options, but it’s not very complicated. There are two types of policies: whole and term life insurance. Whole insurance is a type of permanent insurance while term insurance lasts for a certain amount of time and expires when the term is over.
About the Cash Value of a Policy
Some types of insurance have a cash value, also known as the surrender value. It’s the amount offered to you when you cancel your contract. To receive it, you’ll surrender your claim to any future benefits from the policy. The cash value is usually associated with endowment or whole life insurance policies. Don’t know how much value the policy has? It only takes seconds to estimate the value of your life insurance policy for a viatical settlement. This type of settlement refers to transferring your policy to a third party, like a viatical settlement provider, for a sum of money.
This type of insurance has a cash value, but the function of the cash value is similar to investing. The money you pay into it goes to sub-accounts that allow you to see some growth. But depending on the market, you can also lose money. The cash value is placed in the stock market.
Simplified and Guaranteed Life Insurance
When you apply for insurance, you’ll often take a medical exam so the company can determine how risky you are to insure so they can set your premium rate. But with a simplified policy, you don’t have to take a medical exam, which is why it is simpler. It is also known as a no exam policy. While you don’t have to take a medical exam, you may have to fill out a questionnaire about your health. You’ll have to state whether or not you have a serious illness or smoke. If you are in poor health, you might have to take a medical exam if you have many health problems, and an insurer can still deny you coverage. But if you are healthier, simplified insurance might be a good way to get through the process faster.
Guaranteed issue life insurance is like simplified issue life insurance since you do not need to do a health exam. However, guaranteed issue insurance takes things a bit further, and you won’t have to answer any questions about your health when applying for it. As long as you can pay your premium, you will be covered, and you only have to supply your state of residence, gender, and age. This type of insurance is often appealing for older people because they often have health problems that make it expensive to get coverage with other types. However, if you don’t have any health issues, you might be able to get more coverage at a lower cost by choosing a different type of policy. Because the insurance company doesn’t gain insights into your health conditions through an interview or medical exam, you might need to pay more for coverage.
Image Source: BigStock.com (Licensed)