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US life Insurance policy (Protect the Ones You Love with Insurance )

The policy is a contract between an individual and the insurance company.

it lays out what is covered on the agreement and the ones that are not covered, and the other details of the agreement. Checkout our Pet insurance companies in US

What’s an insurance policy?

An insurance policy can also be called contract of adhesion.

this is because of the agreement between you and your insurer outlining the coverage  they are going to provide to you.

After you sign up and pay for your policy (yay!), you’ll receive your personalized insurance policy in your mailbox, or, in some cases, your inbox.

Open it up, and you’ll see all of the ins and outs of your insurance agreement

The following are the content of your typical policy 

  • Your insurance policy number
  • How long you’re covered for
  • The price of your coverage
  • How much stuff you’re covering
  • Your deductible
  • Definitions of insurance terms
  • What’s covered under your policy
  • What isn’t covered under your policy

It is important to note the following

It’s probably a good idea to check out exactly what is covered under your renters

Or homeowners insurance policy so you’ll understand when you can and cannot use it.

For example: say bad weather causes flooding and you want to file a claim… unfortunately you’ll be out of luck as no policy – homeowners, renters, or condo/coop – covers flooding.

Alternatively, say there was a short circuit and your place catches fire destroying your stuff – you can file away as damage due to fire is covered on both policy types. Like to know the important of insurance ?

All coverage deeds can be found under the ‘property coverages’ section.

And if you’re looking to see the total worth of the stuff you’re covering, you can find that information on your Declarations Page

(honest… that’s what it’s called), which is typically found on the first page of your policy.

You can also learn more about the breakdown of your premium, as well as your deductible, and the total duration of your coverage.

As with most legal contracts, insurance policies can be a bit difficult to read.

If you take a look at your policy, you’ll see that it’s full of confusing exceptions, and Middle English words like ‘pewterware’ and ‘smudging.’

This can make it pretty hard to understand what’s covered under your insurance policy.

What is life insurance 

Life Insurance can be defined as a contract between an insurance policy holder and an insurance company,

where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period.

Here, at ICICI Prudential Life Insurance, you pay premiums for a specific term and in return, we provide you with a Life Cover.

This Life Cover secures your loved ones’ future by paying a lump sum amount in case of an unfortunate event.

In some policies, you are paid an amount called Maturity Benefit at the end of the policy term.

There are two basic types of Life Insurance plans 

1. Pure Protection

2. Protection and Savings

Pure Protection

A Pure Protection plan is designed to secure your family’s future by providing a lump sum amount, in your absence.

Protection and Savings

A Protection and Savings plan is a financial tool that helps you plan for your long-term goals like purchasing a home, funding your children’s education, and more, while offering the benefits of a Life Cover.

Meaning of the commonly used terms in life insurance

  • Life Assured: It is the person who is covered under the insurance policy
  • Proposer: It is the person who pays the premiums of the policy.

For example: If you have bought the policy for yourself, then you are both the Life Assured as well as the Proposer.

Similarly, if you purchase an insurance policy for a family member, then you are the proposer and the family member is the Life Assured.

  • Nominee or Beneficiary: It is the person you appoint at the time of buying the policy to receive the benefits of your insurance policy, in your absence.
  • Insurer: The insurance company that sells the life insurance policy is called the Insurer (for example, ICICI Prudential Life Insurance).
  • Life Cover: It is the amount that the Insurer will pay to your Nominee in case of an unfortunate event.
  • Maturity Benefit: For Protection + Savings policies, the Insurer pays a certain lump sum of money on completion of the policy term. This amount is known as the Maturity Amount.
  • Premium: A premium is the amount you pay to the insurer for receiving the benefits of the insurance policy.

These payments can be made on a regular basis throughout the policy duration, for a limited number of years or just once, as per the options available under the policy you choose.  see also how to be work while studying in US 

  • Premium Payment Term: The number of years for which you pay the premiums is known as the Premium Payment Term.
  • Policy Term: The number of years for which the Life Cover continues.

 Some of the life insurance companies in US

Northwestern Mutual
Haven Life
State Farm
Banner Life
Principal
Pacific Life
Guardian Life
Nationwide
Primerica
MassMutual
 New York Life
 Allstate
 John Hancock
 Protective
 Mutual of Omaha
 Prudential

Life insurance is essential if you have anyone in your life who depends on your income.

Unfortunately, many people don’t have the right type of coverage or the right amount.

About half of all U.S. households have less life insurance than they should, according to the Life Insurance Marketing and Research Association.

A separate study by employee benefits provider Unum finds that about a third of all households will be financially strained within the first month of losing a breadwinner.

life insurance doesn’t cost as much as you might think it does.

Some people even estimate that life insurance costs up to five times as much as it actually does, reports the Insurance Information Institute

Types of life insurance policies in US 

One of the major barriers to understanding life insurance can be the jargon.

Terms like “indexed universal life insurance” and “whole life insurance” can seem a bit unclear.

To make understanding life insurance easier we define some of the topic’s unique words and phrases.

We go more in-depth on these in our How Does Life Insurance Work? and How to Buy Life Insurance guides.

  • Permanent life insurance: a category of long-term coverage that includes whole life and universal life policy types.

These are more expensive than term but offer more benefits.

This category is sometimes called cash value life insurance because of the savings like a cash value account that’s built into the policy.

  • Whole life insurance: a type of permanent policy that has consistent premiums and guaranteed accumulation of cash value.

This policy type may be eligible for dividends from a mutual company and typically is expensive.

  • Universal life insurance: a type of permanent coverage that builds cash value.

It’s frequently offered with flexible premiums, although those premiums affect the cash value and death benefit.

  • Indexed universal life insurance: a universal life policy that accumulates cash value based on the performance of a specific market index such as the S&P 500.

This type of policy is typically less expensive and less risky than a variable policy because there is no actual investment in an index.

  • Variable life insurance: a type of permanent policy that ties cash value to a number of investment options.

These options may be based on whole life or universal life coverage.

  • Term life insurance: a life insurance policy that covers the policyholder for a predetermined length of time, typically ranging from five to 30 years.

When the term ends, there is no benefit to the policy.

Though no cash value accumulates, the premiums for term life policies are usually substantially lower than premiums for permanent life policies.

  • No-exam life insurance: a life insurance policy that doesn’t require a medical exam, thus speeding up the approval process.
  • Death benefit: the money that the life insurance company pays your beneficiaries after your death.

This is often a tax-free payment that can be paid as a lump sum or in installments, depending on your policy, and is usually only distributed if your premiums are paid-up.

You typically select the amount of the death benefit, also called your coverage level, when you apply for a policy, though some policies allow you to later change this amount.

  • Cash value: a portion of your premium that the life insurance company sets aside in a separate account after paying administrative fees and other expenses. checkout top 20 fully funded scholarship in  china for international  student.

In general, this money grows tax-deferred based on a fixed rate, a market index, or other investments.

Only permanent life policies have a cash value component.

Benefits of life insurance in US

The following are the benefit of life insurance

  • Peace of Mind/ Financial Security – Having life insurance provides the ultimate peace of mind.

This is because if someone were to meet with their demise, they know their family and loved ones will have a financial safety net. All of us have some financial liabilities,

But an adequate life insurance cover ensures that your debts or loved ones will be financially taken care of in the event of your death.

  • Wealth Creation – Some life insurance plans also offer you the opportunity to create wealth.

Apart from life cover, these policies invest your premium in different investment classes to deliver superior risk-adjusted returns that beat inflation and grow your corpus.

For example, 30-year old male investing ₹ 20,000 per month for 20 years in ICICI Pru Signature (ULIP Plan)# can get ₹ 65.39 Lakhs at 4% annual return or ₹ 1 crore at 8% annual return*

  • Tax Savings – Life insurance plans offer dual tax benefits^. The premiums paid offer tax deduction under Section 80C of the Income Tax Act.

This means up to ₹ 1.5 lakh premium paid annually is deducted from your gross income, thus lowering your tax outgo. Separately, the maturity insurance plans may be entirely tax-free.

This tax benefit^ is under Section 10(10D) of the Income Tax Act.

  • Buy Young, Save More – Life insurance plans give you the ability to lock in low premium rates while you’re young.

If you buy the same policy when you are older, you will be paying a much higher premium compared to if you bought the same plan when you were younger.

For example, in case of the term insurance plan ICICI Pru iProtect Smart, a 20-year old male buying a ₹ 1 crore term plan for 30 years coverage will have to pay ₹ 5955 annually.

If they buy the same plan under the same conditions after 10 years i.e. at 30 years of age, they will pay ₹ 9009 and if they buy it another 10 years later checkout fully funded  college scholarship for international student in USA

i.e. at 40 years of age, annual premium will be ₹ 18,180.

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