Life Insurance

Looking at North Carolina life insurance plans? There are so many types, and forms and versions and the language of the policies aren’t any easier to understand.  Life insurance is a  plan under which large groups of individuals share the burden of loss from death by distributing funds to the beneficiaries of those who die. Life insurance, for an individual, creates an estate for one’s heirs and dependents.

The three major forms of North Carolina life insurance are: term, whole life, and universal life. You can also obtain combinations of these with a North Carolina life insurance policy.

The most well know of these contracts is term life insurance. It is issued for a set number of years. And at the end of the time period, the protection under these policies expires and there is no cash value upon expiration of the contract. When looking for North Carolina life insurance, this is the simplest and can be the cheapest method of getting life insurance.

North Carolina whole life insurance contracts run for the entirety 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.

The universal life policy contract was introduced into the United States in 1979 and is a relatively new form of life insurance in this country. However, universal life has become a major player in life insurance. With a North Carolina 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. Under the two types of universal life contracts, Type A and Type B, the death benefit varies.   In Type A policies, the (death) 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.

Insurance premiums are usually paid either level throughout the premium paying period or the insurance may be issued with a policy that provides for a periodic increase in premium relative to the age of the insured individual.

Most ordinary life policies are issued with a premium that is the same throughout the payment history of the policy. Higher payments in the earlier periods are offset in the later years with costs going up but the payment remaining the same.  The necessity of charging more than true cost in the beginning payments is to make up for higher costs down the road.  This is due to the fact that mortality rates, which are what premiums are based on, increase with age. One feature of life insurance policies is that the policyholder at his or her discretion may borrow against the cash value of the policy or totally recapture the value by allowing the contract to lapse.

When deciding on  North Carolina life insurance, note that most insurers are able to provide many different types of policies by combining term life insurance and whole life insurance. An example of package contracts is the family income policy. There is 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 built-in) 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.

Some North Carolina 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 policies that include: Twenty year life policies; thirty year life contracts, and life policies paid to age sixty five. 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.

Which should you get, term life or whole life insurance?  Term life policies are adequate 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.

North Carolina life insurance contracts offer many options for each individual. After you have gotten several NC life insurance quotes, 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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