A nice feature of life insurance policies is that they provide a 31-day grace period from premium due date, during which the missed premium can be paid without any break in coverage. If you own a term insurance policy and fail to pay your premium during the grace period, your policy will be lapsed (terminated). If you own a whole life policy with sufficient cash value, the insurance company, with your authorization, can take a loan against the cash value to pay for your premium.

Accelerated Death Benefit or a Living Benefit is a rider that once added to a life insurance policy, it will allow the policy owner to receive a portion of the death benefit during the insured’s life if he/she becomes terminally ill. The amount taken out will be subtracted from the policy death benefit and the balance (minus certain adjustments) will be paid to the beneficiary at insured’s death.

If your employer is paying for your life insurance coverage, it’s almost certainly a group policy that only covers you while you are employed. This means that you could be vulnerable if you lose your job or have a break in employment. Furthermore, all group coverage, provide a limited death benefit (often one to two times your salary), leaving you and your family significantly under insured.

The policy owner has the right to not only name a primary beneficiary, but also secondary, tertiary, etc. (contingent). Beneficiaries can also be designated as revocable or irrevocable. At the death of the insured, the proceeds are paid to the primary beneficiary and if the primary beneficiary is not alive, to the contingent beneficiary. If no named beneficiary is living at the time of insured’s death, the proceeds will be paid to the insured’s estate.

The beneficiary is the person to whom the policy death benefit (proceeds) will be paid at the insured’s death. The beneficiary may be a person, class of persons, an institution or other entities such as a foundation, charity, corporation or a trust. Trusts may be used to manage life insurance proceeds for minor beneficiaries.

The beneficiary can also be the insured’s estate, but this is generally not recommended for the following reasons:

A whole life or straight life policy requires you to pay premiums for life or up to age 121 when it matures. But you can pay the cost of your policy in a shorter period of time such as 10 or 20 years, or to a specified age such as age 65. This means your policy will be fully paid up and no more premiums are required after the end of premium-paying period and until insured’s death, policy surrender, or the contract’s maturity date.

The answer, as usual, is “that depends.”

If you are relatively young, have a family and lots of debt or expected debt, and want to make sure your family sees little or no financial impact in the event that you die too early, you may want to buy as much term insurance as you can afford.  And studies show that term life is more affordable that most people think.

Generally, there are two basic types of life insurance; term life and permanent life.

Term Life– Lowest Cost, Highest Coverage, Limited Time of Coverage

In a nutshell, life insurance creates liquidity, and there are a few types of life insurance purchasers: