Life Insurance

When trying to make a decision about Virginia life insurance it can get quite complicated since there are so many types, and forms and versions and the language of the policies themselves don’t make it any easier to understand.  Life insurance is a plan where large groups of individuals may share the burden of loss from death by distributing funds to the beneficiaries of those who die. Life insurance, for an individual, is a way an estate may be created immediately for one’s heirs and dependents which they then inheirit upon your death.

The major types of Virginia life policies available are term, whole life, and universal life. Combinations of these basic Virginia life insurance policies are sold in high  volume.

The most basic of these contracts is term life insurance. The policy is designed to be issued for a set number of years. The protection under these policies expires at the end of a specified period and no cash value remains upon expiration of the contract.  When choosing your VA life insurance insurance you’ll find that this is the simplest and often cheapest method of getting life insurance.

Virginia whole life insurance contracts is in place for all of the insured’s life with the gradual accumulation of a cash value. The cash value of the contract is less than the face value of the policy and is paid to a policy holder when the contract reaches maturity or is surrendered.

Universal life policies were introduced into the United States in 1979. The policy has become a major player in life insurance. Under a Virginia universal life insurance policy, the insured has the flexibility to decide the size of the premium and amount of benefits within the policy. The insurer charges the insured each month for general expenses and mortality costs, crediting the amount of interest earned on the policy to the insured. There are two types of universal life contracts: Type A and Type B. In Type A policies, the benefit is a set amount, and in Type B policies, the death benefit is a set amount plus any cash value that has accumulated within the policy.

Life insurance is grouped by the type of customer, and the classifications include: ordinary, group, industrial and credit.  The ordinary life insurance market includes customers of whole life products, term life policies, and universal contracts. The market is made up primarily of individual purchasers of annual based premium insurance.  The group insurance market is mainly comprised of employers who set up arrangements for group contracts with the purpose of covering their employees.  The industrial insurance market is made up of individual contracts sold in small amounts. Premiums are collected on a weekly or monthly basis from the insured at their home.

Credit life insurance is normally sold on an individual basis, generally as part of an installment purchase contract. The seller is protected for the balance of any unpaid debt if the insured dies before the completion of the installment payments.

Insurance may be issued with premium payment made in two different ways. You can have the premium remain the same throughout the premium paying period or the insurance may be issued with a policy that provides for a periodic increase in premium based on the age of the insured individual.

The majority of ordinary life policies are issued with a premium that is the same throughout the payment period and term of the policy.  An interesting side feature of life insurance policies is that the policyholder may borrow against the cash value of the policy or totally recapture the value by allowing the contract to lapse.

When looking for Virginia life insurance, you should understand that an insurer is able to provide many different types of policies by combining term life insurance and whole life insurance. Two examples of package contracts are the family income policy and the mortgage protection policy. In each package a primary policy type which is generally whole life is then combined with term insurance and calculated in such a way that the amount of protection continues to decline during the duration of the policy. Mortgage protection insurance is designed in order that the decreasing term insurance is approximate to the amount of mortgage remaining on a property. In other words, as the mortgage is paid down, the amount of insurance declines accordingly. The declining term insurance expires at the end of the mortgage period, leaving the base policy still in effect.

Family income policy provides decreasing term insurance within the package in order to provide a specified income to the beneficiary over a period equivalent to the period of time when the dependent children are young.

Some Virginia whole life insurance policies allow the policyholder to place a limit on the period during which the premiums are to be paid. Buyers are able to purchase twenty year, thirty year or pay to sixty five years old policies. The insured initially pays a higher premium in order to compensate for the limited premium paid in the future. At the end of the stated paying period, the policy is declared to be “paid up,” however policy remains in effect until death or the policy is surrendered.

Term life policies are generally enough when the need for protection is for a specified period of time. Whole life policies make the most sense when the need for protection is permanent.

The universal life plan earns interest at a rate approximately equal to rates available on long term bonds and thus can be used as a convenient savings plan. In addition, the insured may adjust the death benefits as needs change. The policy offers the owner cost savings in the way of commission expense providing flexibility for the insured by eliminating any necessity of canceling one policy and purchasing another when the insured’s requirements change.

Clearly Virginia life insurance contracts offer many options for each individual. When you find several VA life insurance quotes you then need to make sure to talk to the companies about the specifics of their policies and what they do and do not cover.

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