From the early beginnings since 1735, the when the history of life insurance in the United States of America began, till today it has a very big presence It a very complicated network and the basis of all this is the rotation of money which comes from the policyholders against the prevailing rates of life insurance. We will deal with that part at length later but first let us take a look at the basic concept of life insurance.
Life insurance is based on the concept that there are no guarantees on life. We are born into this world; we live a life and then die a death. We have no control on any of this. But we can however make provision for some contingencies. Life insurance does this by allowing us to put a price on our life and pay for it. This way, a life may be lost, but the money is still safe.
What powers the financial aspect of life insurance policies today is the rates. A person pays the insurance company in the form of regular (or lump sum) premiums. This is known as death benefit. The company in turn makes a payment to the survivors against the life of that person. The premiums to be paid and the death benefit may vary depending on the “rate” of life insurance. The rate of life insurance is a factor which is used to determine the value of an insurance policy. This varies daily and it is very dependent on fluctuating market conditions.
Therefore, before getting a life insurance policy in the U.S., a person should be aware of the prevailing rates. Due to the wide availability of the internet today, these rates are readily available to people.
Rates may vary depending on several factors. Firstly, different type of policies will have different rates. The rates will also differ from company to company so it is important to select those who offer the most competitive rates. Another factor is the variable factors of a policy. A person’s smoker status will affect the rates. The age of the policyholder will have a bearing on the rate. The type of occupation also influences the rate. A person who has a hazardous job will have to pay higher premiums.
Once one has decided which type of life insurance policy is required, then it is just a question of logging on to some of the several insurance websites which are available. After logging on to a particular website, personal details have to be keyed in and the options offered by the company selected. Once all the details have been completed, the data is submitted. In a short while a quote will be sent through E-mail and the rates will be made available. One can submit several queries and the most competitive quote can be selected.
It is advisable to keep a record of the rates as they fluctuate on a daily basis. This will give an idea to the policyholder about what they can expect to get out of the policy at any given point of time. One can also move money around according to the prevailing rates. At a time when rates are low, then the money can be put into secure cash funds but when the rates are climbing then it can be put into investment policies to ensure a good return on the investments.
Another matter of prime importance connected to the rates as discussed earlier is the type of policy that is being considered. This again will depend on what a person wants out of a particular policy. In the U.S. there are two major categories of life insurance policy. The first one is investment and the second protection. The rates applied to each type of policy (and their sub-categories thereof) will vary as per the different features that each policy has to offer. A high-investment high-risk policy will also be accompanied by relatively higher rates. A regular income protection life policy will have standard rates which will be lower compared to others.
So we see that the whole field of insurance and life insurance in particular in the U.S. is such that the prevailing rates have to be considered. Without this, there would be no control on what a policyholder could expect to get in return for premiums paid over the years.