Given the important function of life insurance in protecting the financial security of a family after the death of a family breadwinner, denial of a valid claim can cause extreme hardships. Whether you are a policyholder or beneficiary, the starting point to protecting your interest is to understand the type of life insurance coverage you need to fit your goals and needs. This blog post provides a broad overview of the basic features of the most common types of life insurance coverage. There are several categories of life insurance that serve various functions and provide disparate benefits. Common types of life insurance include the following:
- Whole Life Insurance: This form of coverage provides protection over the entire life of the policyholder. An important feature of this form of insurance is that it offers a set level of security. The insured can also borrow against the fluctuating cash value of the policy, which provides a financial safety net to respond to unanticipated financial emergencies.
- Variable Life Insurance: With this type of coverage, the policy has a cash value that can be invested in a range of investments that might include money market funds, stocks, and bonds. Because of the speculative nature of the investment products, there is no guarantee of the cash value of the policy. Rather, the value will be based on the performance of the investment sub-accounts. This type of policy offers tax benefits because investment earnings and capital gains can be tax deferred during the period the earnings remain invested.
- Term Life Insurance: This form of coverage only provides financial security for a fixed and specified period of time, such as ten, twenty, or thirty years. This type of coverage offers an important tradeoff that must be considered. While the policy will tend to be subject to a lower premium, this form of coverage offers no cash value. This form of coverage can have various features that include terms for return of premium and the ability to transform the policy to whole life coverage.
- Variable Universal Life Insurance: Like with variable life coverage, the cash value of this type of policy fluctuates based on the value of an investment sub-account. The entire form of coverage is regulated as a security. This form of insurance involves a more substantial financial risk.
- Universal Life Insurance: When putting together a long-term financial plan or engaging in retirement planning, this form of coverage provides certain advantages. The policy provides protection for the full life of the policyholder, and it accumulates a cash value. The coverage facilitates financial planning through flexibility in both face value and premiums.
- Permanent Life Insurance: The insured will receive a specific payout at the end of the policy term (i.e. the life of the insured) provided the premiums are kept up to date. Universal, variable, whole, and single premium are different forms of this type of policy.
Our Miami life insurance claims law firm invites you to contact us if your insurance carrier is refusing to comply with its contractual obligation. If you are a beneficiary with questions about life insurance claims, you are invited to contact our law firm to speak to an experienced Miami insurance claims attorney. My law firm specializes in representing policyholders in claims disputes in Miami and throughout Florida. Click here to read about some of our case results. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.