Personal Life Insurance

Everything you need for personal life insurance policies

Personal life insurance plans are available from countless insurers, each with their own slightly different plans. Fortunately, you can compare rates from multiple providers easily online. Secure quotes here from the top life insurance policy providers in the country.

Finding the best rates on personal life insurance policies is quick and easy. Simply fill out a short form and quickly receive quotes from the best life insurance providers. Save yourself time and money by comparison shopping quickly and easily for life insurance online.

Below you will information to keep in mind as you request quotes from different agencies and decide who to use as your personal insurer.

A couple important things to remember

1. It is currently a buyer's market for life insurance. Rates are at historic lows and the time to get on a good plan has never been better. Get a quote and see how low rates have dropped

2. If you are relatively healthy, you will almost always save in the long run by securing a life insurance plan now than if you wait until your health declines.

Personal Life Insurance Terms and Definitions

The major parties and variables involved in personal life insurance are as follows:

Insured Party - The insuredparty is the person who is insured under the personal life insurance plan. This person can either be the policy owner or someone else who the policy owner insures.

Policy Owner - The policy owner is the person who signs for and pays premiums to the life insurnacne plan. If the policy owner is insuring him or her self, the person is also the insured party.

Beneficiary - The beneficiary is the party to whom the benefits of the life insurance policy will be awarded. The beneficiary can be one or more persons and can also be designated to an estate.

Insurer - The insurer is the life insurance company who underwrites your personal life insurance plan and who will pay out to your beneficiary in the event of your death or serious injury, if such a thing is included as a rider on your policy.

Investment Banks - The least-mentioned, and often most important part involved in a life insurance plocy is the investment bank, who handles the money paid into the policy and is reponsible for returning gains to the insurer.

Insurable Interest - the term 'insurable inerest' refers to the need for a policy owner to have a vested interest in the insured party. In other words, the policy owner must be able to show that he or she is meaningfully connected to the insured party and will suffer some kind of loss upon the person's death or serious injury. Insurance companies consider insurable interest to prevent policy owners from creating life insurance policies for purely speculative purposes. For example, you cannot create a life insurance policy for someone employed in a high-mortality profession for purposes of speculating against that person's death. In this example, there is no 'insurable interest' between the policy owner and the insured party.

Actuaries - Actuaries are mathematicians who use probability and statistics to create mortality tables for the various demographics of a population. The rates for personal life insurance policies, as well as many other insurance products, are largely founded upon actuarial science. Actuaries use past data and current trends to create statistics for the liklihood of a person's future death, and life insurance agencies use this data to set their rates.

Types of Personal Life Insurance

Term Life Insurance - As the name suggests, term life insurance policies are specified for a specific amount of time. The policy owner pays premiums over the course of the policy to keep the policy active. If the insured party dies during the term of the policy, the insurer pays to the beneficiary. However, if the insured party does not die at the end of the policy's term, the beneficiary receives nothing.

Level Term Life Insurance - These term insurance policies have a set premium for a period of longer than one year, usually in five year increments. Many level term life insurance policies also include a guarantee that the insurer will renew the policy at the end of the term at an equal or lesser premium without reassessing the insured party's insurability. Other policies that do not offer a renewal guarantee often force the policy owner to convert their plan to a permanent life insu rance plan if the insured party's health has changed dramatically over the course of the level term policy.

Annual Renewing Term Life Insurance - Annual renewing policies are much like a level term policy, but the term is set for renewal every year, and the insurer always guarantees to offer a new policy of equal or lesser amount without considering the insurability of the insured party.

Mortgage Term Life Insurance - The purpose of a mortgage term life insurance policy is to target the level of policy protection to the amount of an insured party's mortgage, so that in the event of death the mortgage will continue to be paid.

Permanent Life Insurance - Rather than setting the policy to a set term, permanent life insurance policies stay active until they pay out the set specified in the policy (mature). Permanent life insurance policies can never be canceled or terminated by the insurer, except in the case of fraud. Permanent life insurance policies accrue a cash value as they mature, which progressively decreases the insurer's risk on the policy. The positive side of this is long-term permanent life insurance policies can grow a great deal in value over the course of several decades. The negative side of this is that permanent life insurance policies can be very expensive for senior citizens who do not have long to live.

The owner of a permanent life insurance policy can access money in the cash value of the policy by withdrawing money from the account, borrowing against the value accrued in the policy, or surrendering the policy altogether and receiving a single large payout.

Whole Life Permanent Life Insurance - Whole life is the most stable and predictable permanent life insurance policy, an often a good choice for individuals looking for personal life insurance. Insurers guarantee benefits upon death, and they also guarantee set cash returns on the policy. Premiums are also fixed, which makes future financial planning simple and predictable. However, as with other stable interest-bearing investments, whole life insurance policies are often not as competitive as other policy options. Additionally, many insurers will keep the cash value of the account in the event of the insured party'd death, and only pay out the death benefit to the beneficiary, which is specified in the policy.

Universal Life Insurance - Universal life insurance, or UL, is an alternative to whole life insurance. It acts in some ways the same way that an adjustable-rate mortgage works. Rather than using fixed premiums, UL uses adjustable premiums that are set against the current interest rates or financial markets. This potentially allows for higher rates of return because the interest can be credited to pay premiums while the cash account continues to grow. This strategy works best in a gaining market, and universal life insurance policies do not work well in a recession, or when interest rates are low.

Limited-Pay Permanent Life Insurance - A popular policy plan for younger-aged insuring parties and individuals seeking personal life insurance, limited-pay policies have a set term for paying premiums, after which time no further premium payments are required to keep the policy active. Limited-pay policies can be more expensive in the short term, but after they are paid off they continue to grow and maintain insurance coverage indefinitely.

Endowment Life Insurance - Endowment life insurance policies are paid upon maturity whether the insured party lives or dies. These policies are structured so that the cash value of the policy account equals the face value of the death benefit. A specific length of time is predetermined for this maturity date. Endowment life insurance is more expensive than other permanent life insurance policies because the premiums are paid in a shorter period of time and the maturity date is earlier than other personal life insurance plans.

Other Important Considerations

Riders - Riders refer to any modifications or additions done to a personal life insurance policy, usually specified by the policy owner. Common riders to personal life insurance include double payouts on accidental death, and waiving future premiums in the event that the insured party becomes incapacitated.

With-Profit vs. Non-Profit Life Insurance Policies - Many life insurance shoppers do not know that some agencies offer policy owners profit sharing in the insurance company their policy is underwritten by. Above and beyond the predetermined interest rates and payouts on the policy, some insurers allow policy owners to receive payouts, similar to stock dividends, from the growth of the insuring company's assets. Policies which are make owners eligible for this kind of profit sharing are referred to as for-profit policies. Policies which do not offer this are referred to as non-profit policies.

Taxes - Unfortunately, premiums are not tax-deductable to any personal life insurance policy. However, most life insurance policy payouts are not eligible for capital gains or income tax. The notable exceptions to this rule are some short-term personal life insurance policies, but even these are not always taxed and whether or not they are depends largely on the gains made and the period of time in which the gains accrued.