Article  Life Insurance Basics and Frequently Asked Questions Today, many people are choosing to invest in life insurance due to its many benefits and financial reassurances. However, before deciding on a specific policy, it is important for individuals to understand the types of policies available to them and how much money they should be insured. These are important aspects which can lead to peace of mind for an individual as well as their family in the event of the death of a family member, friend or co-worker. Various payment options exist for policy holders, including automatic payments, monthly payments and annual payments. This helps to ensure that policies are available to anyone who might need them and helps to alleviate the potential financial strain such an expense might cause while still protecting families and other important groups or entities. In many instances, policy owners are awarded a financial incentive for paying annually; the total payment each year if often less than if individual payments were made on a monthly or semi-annual basis. No matter what type of policy is purchased, there must be a beneficiary named. A beneficiary, or group of beneficiaries, listed on a life insurance policy are those who will receive a policy's proceeds in the event that the policy owner passes away. Beneficiaries are named when a policy is taken out and can change at any point in time, based on the needs and desires of the policy owner. While many policies name the immediate family of the policy owner as the beneficiaries, there are some people who choose to protect their businesses. In these instances, should the policy owner pass away the proceeds of the policy go toward their business. Either way, the policies are put in place to financially protect others. Some policies list contingent beneficiaries. These are beneficiaries of the policy who receive the insurance payout should the primary beneficiary pass away before the insured party. Different forms of insurance are available. Options include whole insurance, term insurance, variable insurance and universal life insurance policies. Whole insurance on a life remains in effect for the entirety of an individual's life, as long as the premiums are paid. There is a guaranteed amount of money set to be paid out in the event of the insured's death and there is a set cash value of the policy. This type of policy can offer dividends which can enhance the values of a policy. Term insurance is a policy which pays out in the event that an individual passes away during a specific time frame. If the end of the term occurs before the insured party dies, there is no death benefit to be paid out. There is also no cash value available for this type of policy. Universal insurance policies on a life allow for flexible premium payments and can be cashed out or otherwise utilized if the insured party passes on before or is still living at the time of maturity date of the policy. For this type of insurance, the premium will change on an annual basis. No dividends are available. Lastly, variable universal policies offer premiums and death benefits found in universal policies with the flexibility and potential investment risks found in variable life insurance policies. One of the principle concerns facing those interested in investing in life insurance policies is how much money is needed. This is often the first hurdle individuals need to conquer when it comes to investment decisions. Overall, policies are designed for financial protection in the event of a death. When individuals are not shopping primarily for protection, they should likely consider other investment opportunities. A general rule of thumb when it comes to insurance policies on an individual's life is to purchase an amount that, after subtracting the costs of last expenses, is equal to five to seven times the individual's annual gross income. Category Finance Author Anonymous Add To Favorites Print This Article Email Article To A Friend Post Comments   Rate This Article (0) 1 - Poor2345 - Good678910 - Excellent Added On Fri May 21st,2010