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LIFE

A LIFE POLICY IS A LOVE LETTER TO YOUR FAMILY

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There are 2 types of Life Insurance:

Term: It is characterized by having a validity period, that is, an end date, which generally ranges from 10, 20, 30, 35 and up to 40 years.

Permanent:As its name indicates, this type of insurance is not valid and the insured sum will be paid when you have died.

All other types fall into these two categories, except for an accidental death and dismemberment policy, which is exclusionary (it can only be paid if you die in an accident).

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1. TERM (Temporary) VS. WHOLE


The most common question to ask yourself when purchasing a life insurance policy is how long you need it for. Because:

Term life insurance is valid (10, 20, 30 years), however
Whole life insurance does not expire and expires until the day you die.
But, since the term expires, it is significantly cheaper!

This type of term life insurance is the most popular on the market due to its low premium costs.

Understanding your need and adapting the type of life insurance policy is the best way to make a smart decision that can lead you to save a significant sum of money.

Studies show that life insurance helps protect your loved ones primarily in:

- Income replacement
- Housing costs
- Your children's University
- Debt


Each of these are temporary obligations, although they can span several years.

Term life insurance offers coverage from one year to 30 or 40 years,  during which time the insurance company will not be able to modify your premiums, of course as long as you keep your policy active.

It's probably the best (and cheapest) option for you most of the time.

¿WHY IS TERM LIFE INSURANCE SO POPULAR?
The main reason, the price.

This type of life insurance is how you will get the most return on your investment if you need a larger amount of coverage. In fact, it is the most common type of life insurance available and is primarily offered through employer group life insurance plans across the country.

In addition, it is very easy to understand since in essence, there are only two elements:

- Death benefit
- Cousin

 

The benefit Death is the sum of money that the insurance company will pay to your beneficiary when you die.

The cousin It is the amount of money you pay month to month.

 

Simple. You pay the company your regular payment on time and the insurance company guarantees to pay the claim when they receive it. Term policies can have riders attached, which add different benefits, and they can also become more permanent policies.

If you look at it this type of life insurance has very few limitations such as the ability to qualify, maximum coverage based on need (called insurable interest) and having an inevitable termination date.

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2. UNIVERSAL LIFE INSURANCE  


What do you do if you need something more permanent than term life insurance, but don't want to spend a lot of money on whole life insurance?

A universal life insurance plan may be the right life insurance policy for you.

Perhaps the most flexible and customizable type of life insurance, a universal life insurance policy is a kind of hybrid between the term term and the entire policy. The main benefits of universal life insurance are:

- Long duration of coverage (up to life)
- Lower costs than whole life insurance.
- Flexible payment and death benefit options
- Ability to grow cash more aggressively
- Universal life insurance policies can be customized to provide coverage at virtually any age. They can be built to last up to 80 years, 90 years, or even a lifetime.

 

They are also a good type of permanent life insurance policy, especially when they have built-in guarantees, they are considered some of the best life insurance plans for seniors looking to get the most out of their money.

Kind of like whole life insurance, there is also a cash component.

It is generally used for:

  • Premium Payment Offset Later in Life

  • Temporarily stop premiums altogether

  • Invest in indices or mutual funds

  • Access through loans

Its ability to modify your premium payments, or even adjust the death benefit (if the life insurance policy allows) makes it much easier to use. You should keep in mind that there are fewer guarantees with a universal life insurance plan compared to whole life insurance.

In a whole life insurance contract, you are guaranteed a minimum death benefit, a minimum interest rate, and very little risk.

With universal life insurance policy, they may not be guaranteed, and if you don't have cash, your policy could collapse. For those of you who are investment-minded you can look into indexed universal life insurance policies that allow cash to move with market indices.

Would you like a quote? click   QUOTE  

3. WHOLE LIFE INSURANCE

A whole life insurance policy; It has very different conditions and characteristics that are of interest to some people.

The most common reasons why people don't like this type of life insurance:

  1. The monthly premium is more expensive compared to term life insurance

  2. Its operation is more complex which is more difficult to understand.

  3. It is not a product that easily fits all needs.

The cost, per thousand of coverage, is significantly higher than term life insurance because the insurance company knows it will pay someday.

Whole life insurance is also more complicated. Instead of just a premium and death benefit payment, there is a cash value component.

This cash value component earns interest and potentially dividends, and may even be accessible.

Lastly, due to the cost of these permanent life insurance policies, most consumers do not find that it meets their needs along with their budget.

If you're still unsure, check out our information on term life insurance vs. whole life insurance.

Would you like a quote? click   QUOTE  

4. INDEXED UNIVERSAL LIFE INSURANCE


One of the newest types of life insurance available today is so-called indexed universal life insurance, or IUL for short. It is one of the most complicated types of life insurance policies and is only advisable to purchase if you fully understand the policy.

An indexed universal life insurance policy is like a universal life insurance policy in regards to its death benefit and cash growth, but it provides additional flexibility for the owner with the cash portion. The cash value within the life insurance policy can fall into two different accounts:

  • stock market index

  • Fixed interest account.

 

Earnings, when left in the account, are tax-deferred, similar to an IRA or 401(k).

However, there are upper limits on returns, so the life insurance policy may not earn as much as the index. The trade-off is a floor, where you are guaranteed a minimum interest rate or growth, which should help if returns are negative throughout the year.

It may seem like you get all the benefits of growth with little risk, but you should be wary of high premium costs later in life, which could reduce the cash value you've earned.

A whole life insurance policy is safer, but an IUL can allow for additional growth over time, outweighing the overall interest of whole life insurance.

Here's how IUL compares to whole life insurance.

Would you like a quote? click   QUOTE  

5. LIFE INSURANCE WITH SIMPLIFIED SUBSCRIPTION

One of the most common ways a life insurance company can evaluate your health in detail is for you to undergo an independent paramedical examination. As they say within the industry, they like to know that you look as healthy on the inside as you do on the outside.

The results of this paramedic exam, which come from blood and urine tests, help them identify your risk, and this determines how much you pay for coverage. But simplified life insurance coverage allows youwaive the medical examination. That is why it is known as a “no exam” life insurance policy. However, you may need to provide one or all of the following:

  • Application and questionnaire

  • Motor vehicle registration

  • Medical Information Office Report

  • Checking the recipe database

  • Financial check

Some operators may even require more information, depending on their subscription criteria.

You can avoid having the paramedical exam, for a small additional cost.

Because they don't have access to the data they get from your blood and urine, they rely on less information, and less information is more risk. More risk means higher premiums.

 

For the younger crowd, the difference in premiums is probably minimal. However, if you are middle-aged or older, the difference could be quite substantial. If you are healthy and really looking for the cheapest life insurance policy, take the exam and you will probably save some money.

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6. LIFE INSURANCE WITH GUARANTEED ACCEPTANCE 


As the name implies, guaranteed acceptance life insurance is one type for which you cannot be denied.

Known as final expense insurance, burial insurance or funeral insurance, they are small, guaranteed acceptance policies, but they have even lower requirements to be approved.

You just need to complete a valid application and make your payments; now it's covered.

Of course, because the insurance company knows very little about you, expect to pay very high premiums and have limited or no access to large death benefits. It is not uncommon to see guaranteed acceptance life insurance policies limited to a range of just $5,000 to $25,000 in death benefit.

Plus, there's one big difference with a guaranteed policy compared to one you fully qualify for: it may not pay out right away!

Many high-risk applicants purchase this type of coverage because it is all they can be approved for. Because of this, there could be a 1-3 year waiting period to get the full benefits.

If the primary insured dies during this time, the insurance company may only pay a fraction of the death benefit, or none, and simply return the premiums paid plus a small amount of interest. These limitations, along with the high cost of insurance, make this the least desirable type of life insurance, although it is the only option for some.

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7. GR LIFE INSURANCEUPAL 


Many people take advantage of insurance through their workplace. Health insurance is the most common, but disability insurance and group life insurance plans are sometimes also available.

A group life insurance option is a policy that is made available to an entire workplace, organization or membership, all under one offer. They come in many different forms, varying depending on the size of the workplace and its eligible employees. They are usually offered in a simplified or guaranteed format with little, if any, subscription.

The two biggest variations are how much coverage you can take and who pays for it. Most of the time, you, the employee, pay the premium, but only if you choose to have coverage through your human resources department.

 

The amount you are eligible for is regularly calculated in one of two ways:

  • A maximum number multiplied by your annual salary.

  • A maximum total coverage amount designated by the issuer

  • In both scenarios, there is a limit to the amount you can get, and you are limited by the plan, not the amount you may actually need.

For this reason, even if it is available through the workplace, you may need to find your own private life insurance plan outside of work to fill the gap.

NOTE: Not all life insurance is transferable if you leave the workplace. Otherwise, you lose coverage once you leave or are fired from employment. Certain occupations or positions may also have different levels of benefits. If you are active military or a veteran, for example, your life insurance benefits are different. Check with your workplace to see what's available, and always compare the cost per thousand with that of a private insurer before deducting it from your paycheck. You can save by saving coverage yourself.

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8. SURVIVAL LIFE INSURANCE


The survivorship life insurance policy is one of the most unique types of policies because it is tied to two lives, not one. Survivorship life insurance policies can be universal or whole, but are always permanent in nature. The death benefit only pays after both policyholders have died, giving way to its nickname, second-to-die life insurance.

Because the death benefit is delayed until both have passed, the cost per thousand of coverage is lower since the insurance company can mitigate its risk. This should only be used in certain circumstances. Would you like a quote? click   QUOTE  

WHAT TYPE OF LIFE INSURANCE IS BEST?


Most consumers purchase term life insurance. It is the cheapest, it is simple and can be adapted to practically any size of obligation from now to 40 years.

Of course, your situation, your need, and your goals will ultimately determine which type of life insurance is best suited.

CIMA INSURANCE reminds you that the key to choosing among the many types of life insurance is to choose by necessity. Whatever it is, match the death benefit amount, duration, and beneficiary to serve the right purpose and you'll save the time and hassle of navigating through life insurance policies that are less favorable.

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