Whole Life Insurance Companies Help In Time Of Need

2007-03-08 10:33:40

( Insurance )



Life insurance has become so much a part of your life. Your important role to secure the finances of your family is supported by whole life insurance companies. Through the help of whole life insurance companies, you have a life insurance policy which guarantees that a specific sum of money will be available to your family at exactly the time it is needed.

You make fixed, uniform payments in a whole life insurance policy. You could say that your premiums in the early years are used to build up cash reserves. Whole life insurance companies take in more money than they pay out on your whole life policy during the first few years. Some of that surplus is segregated as your cash reserve, which grows over time.

Insurance companies invest the rest of the surplus and the earnings go back to you as dividends. Your share of dividends goes into your cash reserve. This explains why, after several years, you are allowed to borrow against your cash reserve. Of course, if at that point you decide to discontinue your policy, you can receive its cash surrender value – which is your cash reserve less some charges.

The best life insurance companies invest your premiums in bonds, stocks, mortgages, and other financial instruments. In addition to life insurance, you often find whole life insurance companies also providing disability insurance, health insurance and annuities.

Life insurance companies face very different risks than car insurance providers or homeowners insurers. For one, when you purchase insurance from your auto insurance providers or homeowner policy issuers, their hope is that you will never file a claim. But when you buy a life policy, whole life insurance companies know that someday a claim must be paid. The only unknown is when your claim will be made.

Insurance companies are facing dramatic changes as a result of the technological revolution, the aging of the baby-boom generation and the keener competition. For example, you now see many whole life insurance companies heavily engaged in health insurance and health care. State governments are also trying to reshape their role in regulating the insurance industry. In a recent development, the state government is experimenting with policy reforms in health care, in order to promote more competition among insurance companies in New Jersey.

You will see more changes in industry practices among the best life insurance companies over time. You will find these changes helpful in your time of need.


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