Madison Life Insurance is a contract between an insurer and an insurance holder, whereby the insurer promises to cover a designated insured person a specified amount of cash upon the demise of that insured individual. Depending on the contract, the insured may also be entitled to regular payments made to the beneficiary at intervals determined by the agreement. These periodic payments are known as premium payments. Premiums are typically paid monthly, quarterly, semi-annually, or annually and are based on several factors. These include the age of the insured, health history, gender, whether the insured has any dependent or dependents, the duration of the contract, and the risk factor.
Each insurer uses different criteria for deciding premiums. Some insurers use the medical exam or medical history of the insured, while others use the answers given by the questionnaire for determining premiums. Some insurers base the premium on the policy type (the type of life insurance) that the insured takes. Then some use the term beneficiary.
The beneficiaries in whole life insurance are those persons who receive the maximum benefit under the policy and who predecease the insured after the policy period. The insurer determines the names of the beneficiaries. Beneficiaries are generally given an option to choose a single person as the designated beneficiary or divide the beneficiaries into multiple beneficiaries.
There are two types of whole life insurance policies – term and whole. In term insurance, the insurer pays a lump sum to the named beneficiaries upon the insured individual’s death. The death benefit of whole life insurance remains with the insurance company until it is fully surrendered. Then the policy is paid in full to the named beneficiaries. At this time, the insurance company may also pay a terminal benefit to the remaining balance of the policy, which can be repaid when the insured individual dies.
Term life insurance policies to pay the death benefit only upon the insured individual’s death. The premiums for these policies are usually tax-deductible. Premiums may also be paid annually or semi-annually, with premiums increasing at a set rate. This premium payment is required to remain unchanged for the duration of the policy. As a result, the life insurance policy is renewable.
Another type of life insurance coverage is income replacement. With income replacement, the amount of income an individual receives during his lifetime is replaced by amounts from life insurance coverage. For example, an individual could replace his death benefit with an amount equal to current and future income. If the insured dies, the amount of life insurance coverage will be replaced by future annuities. However, if the insured is alive in the end, the insurance coverage will be repaid to the beneficiary.
Both term and permanent life insurance policies can be purchased in a variety of ways. These policies can either be bought “as is” or “as contained.” With as containing policies, all premiums and benefits are included when purchasing the policy. However, it should be noted that most insurance companies will not provide coverage for a term life insurance policy type if the purchase is not an “as is” transaction. The company will require that all components of the life insurance policy be provided.
While these main types of life insurance are prevalent, many other types of insurance are available. Individuals can purchase insurance based on age, gender, health, or any different number of factors. Although insurance coverage is necessary for anyone, the main types of content are meant to help provide security and income in the event of one’s death. Each main type of coverage has advantages and disadvantages, so it is important to consider which option would be best for you and your loved ones when choosing a life insurance policy.