Married couples and business partners looking into term life insurance may be better served by purchasing joint term life insurance instead of regular term life insurance. Joint life insurance, like the name suggests, is a type of life insurance policy that covers more than one person. Term life insurance is a type of insurance that only covers you for a specific period of time, as opposed to permanent life insurance that covers you for your entire life.

There are several reasons as to why a couple or partnership would want to purchase joint term life insurance. One reason is because it’s easier to purchase one life insurance policy covering two people than it is to buy a life insurance policy for each person. Another advantage of having a single joint life insurance policy is that you will be paying lower premiums; if you had separate single life insurance policies, your premiums would be higher.

Joint life insurance may also make it easier for one of the parties to get life insurance. The reason for this is because joint life insurance policies tend to be more lenient about their underwriting policies. Take a husband who isn’t in such great health and his wife who is in fantastic shape – if the couple were to get separate policies, the husband would have a harder time getting life insurance. However, under a joint life insurance policy, the wife’s health would be weighed more heavily, and thus, it would be easier for the couple to get insured.

Generally, there are two coverage options available under joint term life insurance: first-to-die insurance and second-to-die insurance. First-to-die insurance pays out when the first person insured on the policy dies. This is a good option for people who want to make sure their families are taken care of, or for business owners who want to make sure their partners have enough money to continue the business.

Second-to-die insurance, sometimes known as survivorship insurance, only kicks in once both the people covered by the policy have died. If your family is going to be in financial trouble after one person’s death, then this probably isn’t the best option for you. However, for families that don’t desperately need the money, this is a great way to leave behind a large inheritance.

Although joint life insurance is a great idea for some people, there are a few cons. For example, if you select the first-to-die insurance option, the second surviving person on the policy may need to purchase additional coverage after the first person’s death. Once the first death occurs, additional money is not paid out upon the death of the second person. In addition, it may be harder to find joint term life insurance because not all insurance companies provide it.

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If you’re thinking of purchasing life insurance, it’s time to get informed. There are two different kinds of life insurance: permanent life insurance and term life insurance. Although the majority of people purchase term life insurance, in some cases permanent life insurance may be the right policy for you. Here are five things you should know about permanent life insurance so you can make an informed decision about your policy.

1. Typically, permanent life insurance offers more coverage than necessary for the average person. People buy life insurance so that when they die and are obviously no longer able to financially support their families, the life insurance will do it for them. Permanent life insurance will cover you for the entirety of your life as opposed to term life insurance, which only covers you for a specified period of time. If, later on in life, your kids are all supporting themselves and you have no major financial obligations to others, then there’s no point in continuing to pay for coverage that you don’t really need.

2. Permanent life insurance, unlike term life insurance, offers an investment component in addition to the actual coverage. Over the years, savings build within the policy. You have the option of using this cash value or borrowing against it. The cash value of the policy is not taxable until you withdraw it. Permanent life insurance policies may be perfect for high earners who are looking into tax-deferred savings.

3. There are three kinds of permanent life insurance. Whole life policies have a fixed premium, which means its premiums never go up, and guaranteed minimum growth. At the other end is universal coverage, which lets you raise or drop your premiums along with the amount of cash that accrues. The third type of permanent life insurance is variable, which lets you decide how you want that cash to be invested.

4. Getting out of a permanent life insurance policy early can be pricey. If you wait long enough, when you get rid of your policy, you’ll receive a nice cash value that will pay you back for all the premiums you paid. It may take ten years or more to build up that cash value. In addition, if you bow out of your permanent life insurance policy early you may be subject to surrender charges. If you cash out your policy, you will be required to pay taxes on the earning portion; the only way to avoid taxes would be to use the money on another insurance product.

5. Permanent life insurance policies are usually more expensive than term life insurance policies. The reason for this is because a term life insurance policy does not automatically result in a payout. If a person lets their term life insurance policy lapse because they no longer need it, the insurance company will have received all those premiums over the years without doing anything for it. With permanent life insurance though, an insurance company knows that they are going to have to make a payout. Thus, they charge higher premiums in order to cover all those guaranteed payouts.

People throw the words “life insurance” all over the place, but do they really understand what life insurance is? Life insurance is a type of insurance that kicks in upon death, life being the thing insured in this case. Upon the death of the insured person, one or more beneficiaries will receive money from the insurance company. People usually carry life insurance in order to make sure that anyone who was financially dependent upon them will remain financially secure despite the deceased’s loss of income. Some people purchase life insurance so their family can properly settle the financial affairs of the deceased while others do so to ensure that their loved ones will not have to bear the expense of paying for the funeral.

The person insured is known as the insuree, and the company doing the insuring is known as the insurer. The person who will receive money from the insurance policy after the death of the insuree is known as the beneficiary. An insured person can designate anyone their beneficiary as long as they do so ahead of time.

There are two types of life insurance available: term life insurance and permanent life insurance. Permanent life insurance, as the name suggests, is permanent – that is, it will last for your lifetime. As long as the insuree keeps paying the monthly premiums, the insurance policy is still valid. Permanent life insurance can be further divided into whole life insurance and universal life insurance. If an insured has whole life insurance, that means they will always pay the same premium each month no matter what. An insuree with universal life insurance will find that their premium is not the same month to month; depending upon the current market conditions, the premium may rise or fall.

Term life insurance is also relatively self-explanatory; it is life insurance that only lasts for a term. Term life insurance will only last as long as was agreed upon when the insuree purchased the insurance policy; that period of time is the term in question. Like permanent life insurance, the insuree is required to keep up with monthly payments to maintain this policy. When the term life insurance expires, the insuree has the option of extending the policy. However, extending a policy does not guarantee that the insurer will provide the insuree with the exact same policy they had before; at this point, the insurer has the choice of raising the premiums and changing the policy.

Term life insurance is a better deal in the short run. The reason for this is because term life insurance often has much lower premiums than permanent life insurance would for the same period of time. The downside to this advantage is that it may be short-lived; every time the insured extends the policy, the insurer may raise the rates. For example, if you originally took out a policy for a period of five years and extended it six times, which resulted in a policy spanning thirty years, those once low rates have probably sky-rocketed by the end of the period. If you need life insurance for an extended period of time, it may be to your advantage to get permanent life insurance.

Life insurance policies are more versatile than you might realize. Although many types of life insurance policies exist, all such polices share some basic commonalities. Life insurance policies are contracts between the insurance company and the insured. In exchange for a lump-sum or period payments, the insurance carrier agrees to pay a specific amount to beneficiaries if the insured dies while the policy is active.

Some life insurance policies provide benefits to the insured beyond loss protection. Whole life and universal life insurance policies incorporate a feature whereby the insurer invests part of the premium. This investment generates returns known as cash value. These are liquid funds that the insured may access during his or her lifetime. Many people tap life insurance cash values in times of economic hardship. Investment opportunity or major purchases are also common occurrences that prompt withdrawal. This approach has two major drawbacks, however.

Returns accumulated on cash values are compounded

Interest initially accumulated subsequently earns additional interest. Compounding results in much higher funds accumulation much faster than otherwise. Withdrawal lowers overall accumulation, as withdrawn funds are unavailable to earn interest. Withdrawal also attracts tax liability.

To avoid these consequences, many borrow against their cash values instead. By doing so, all funds remain intact for continued interest accrual. Moreover, no taxes are payable because the funds are borrowed. As loans advanced by the insurance carrier, interest is charged on the amount borrowed. Interest is typically much lower than that charged by other lenders, however. The loan is secured the insured’s own money! Such a scenario is very low-risk for the lender/insurer; thereby enabling the very low interest rate.

Cash value loans are more attractive than other loans

If the insured becomes unable to fully repay, he or she may reduce the monthly obligation by paying only the interest due. The insured may even elect to have outstanding interest deducted from the cash values. These loans are not reported to credit bureaus, so neither of these options damage the insured’s credit rating.

Defaulting on a cash value loan does entail some risks

If the insured dies before making full repayment, the outstanding balance is deducted from the death benefit. This reduces the amount paid to beneficiaries. If cash values are insufficient to meet outstanding interest while the insured lives, the policy lapses. In such an event, all loss protection and other policy benefits cease.

Overall, cash value loans are a practical option if you need liquid funds. They provide quick access without disturbing established assets or investment returns. You might find yourself very interested by the benefits they yield over time!

Life insurance confers substantial benefits. Security for beneficiaries, cash value accumulation, and substantial tax advantages – to name a few. Most people are very familiar with these positive aspects and wisely carry coverage on their lives.

Insurance companies are businesses. As such, they must generate sufficient revenue to cover their costs. They must have a little bit left over to meet the wolf at the door each month, too. In exchange for all the wonderful services provided and returns generated, they charge a fee. It’s called a premium.

The most common method of premium payment is on some periodic basis

Premiums are typically paid in monthly, quarterly, or annual installments. The less often a payment is made, the larger a particular installment is. The larger installments still add up to lower overall premium costs for you, however. This is due to the savings insurers enjoy from lower payment and processing costs of less frequent payments.

Another huge benefit of larger premiums is increased yield. Larger sums enable insurers to obtain higher investment returns on premium revenue. Again, they pass this advantage on to insureds through lower overall policy cost.

Single payment premiums are a relatively new phenomenon

As the name implies, only one installment is required. From then on, the policy is essentially on auto-pilot. This large lump sum generates much larger returns than do smaller frequent payments.

For the insured, the benefits of single-premium payments are many. Cash values begin to accumulate immediately on the lump sum. They grow much faster than with small multiple payments stretched over a long period. The returns are also higher than small periodic payments. Insurers pass on their lower premium processing costs to you as well. Although much larger than periodic premiums, the single premium is lower than smaller payments would total over time.

Single premiums also offer a significant tax advantage

Although cash value accumulates much more quickly and substantially than with periodic premiums, they are not taxed. You may also borrow against them without tax liability. Moreover, your heirs do not have to concern themselves with taxes either. In fact, the Tax Reform Act of 1986 spawned single premium life policies as a tax shelter.

Another unique advantage of single premium policies is that death is not the only event that triggers payment of policy benefits. Terminal or critical illness diagnoses will qualify you for policy benefits without having to die for them!

With all its tax, investment, and security benefits, these policies offer singular advantages. Don’t multiply your worries. Take advantage of this once-in-a-lifetime opportunity!