Types Of Over 50 Life Insurance Policies

By Author: Troy Ellis
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Life insurance is not something many people consider important. Yet, it is a useful tool that can benefit your financial plan and your survivors. However, over 50 life insurance can become costly. Comparing different providers and their offerings is a necessary exercise for obtaining the most cost effective and appropriate package.

Coverage for this mature market was devised to fill a need. Flexibility is inherent in its wide range of offerings available. Packages can help you maintain your standard of living. Or, they can simply help defray expenses after your death and provide some financial assistance to your survivors.

Some packages can be used to transfer wealth between generations. Others may offer tax benefits not available in other financial instruments. An example is the fact that death benefits are tax free for those in the United States. Probate expenses and delays could be bypassed.

Basically, the two main classes are whole and term categories of coverage. Each class is further subdivided into subclasses. The main difference is that term policies are simply life policies with no financial investment ...
... component. The period of each policy can be one year or more. The cash value component of whole policies can be borrowed against. Its accumulated amount can be paid monthly for the benefit of the insured, if there are no financially dependent future survivors. Traditional, universal and variable policies are the three main subclasses of whole life insurance.

For this type of insurance, premiums are higher, since some of the amount is put into savings. Still, premiums do not change over time, unlike term premiums. Cash value usually grows along with time.

In the traditional formula, policyholders get more guarantees. Guarantees are provided for annual premium, minimum cash value and death benefit. Generally, majority of such policies are participating. What this means is that dividends can be used either to increase cash value and death benefit, or decrease premiums or provide a cash refund. In a universal formula flexibility in premiums to be paid is allowed. Premiums may change across the years or even not be paid in some years. Maximum premium amount, minimum cash value and death benefit are also guaranteed. In a variable formula, death benefits and cash value may fluctuate depending on investment performance. Generally, there is a guarantee death benefit will not fall below a certain minimum amount.

There are four subclasses of term cover. Higher premiums are associated with the type that has no medical exam requirement. Level term coverage, provides for a fixed amount of coverage with fixed premiums t over a specified period of time. Renewal rates can rise significantly. With a convertible policy insured may change term policy to a whole policy type. Fourth category offers coverage that increases or decreases over a scheduled period of time. However, premiums stay level as a norm.

For every over 50 coverage type, there are pros and cons. Interested purchasers are advised to make this an informed choice. Long term implications should be taken into account and considered policies should be examined for adequacy towards meeting desired goals. A wrong policy commitment can become unexpectedly detrimental financially. Hence, careful consideration is highly recommended.
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