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Arizona Life Insurance Policies

To make an informed decision about Arizona life insurance you need a basic understanding of the different types of life insurance policies. Not all life insurance policies are the same and your life insurance needs may differ greatly from someone else. This is why an understanding of the various types of Arizona life insurance policies is necessary for the proper financial support of your family once you are gone.

 

Arizona Life Insurance Term Life Policies

Term life insurance polices are generally the most straight forward and easiest to understand. Broadly speaking, you pay premiums on this type of Arizona life insurance policy and if you die before the term expires, then the life insurance policy pays out an agreed upon amount to your named benefactor. Terms generally vary from 1 to 30 years depending upon your personal needs.

It can get tricky if the term expires without the death benefit being paid out. There are several types of term life insurance policies that deal with this differently. Most term life insurance policies simply expire and the death benefit is not paid out. Others allow for renewal and others allow you to convert the policy to a type of whole life insurance policy. While there are term life insurance policies that allow a rider called a Return of Premium (ROP), which pays you back all, or a portion, of your premiums if the death benefit is not paid out.

 

Arizona Life Insurance Whole Life Policies

An Arizona whole life insurance policy is also generally pretty straight forward; you pay premiums during your life and upon your death the benefit is paid to your named benefactor. There is no expiration date or term end to your policy. Whole life insurance is a type of permanent life insurance. There is also a component of the policy that allows you to build up cash value over the life of then policy.

The simplest of whole life insurance policies offer the following:

  • Ability to receive dividends to reduce premium payments.

  • Ability to withdraw funds during life of policy

  • Life insurance company manages cash-value component

  • Non-changing premium

  • Tax-deferred cash accumulation

 

The cash-value portion of this type of Arizona life insurance policy is low-risk, low-reward. There are other types of life insurance policies that allow for more complex investment opportunities that you may have to manage yourself.

 

Arizona Life Insurance Universal Life Policies

Universal life insurance policies offer more flexibility than regular whole life insurance policies. In addition to the cash-value component that exists with a whole life policy, a universal policy offers you the following additional flexible options:

  • Flexibility of interest options on cash-value accumulated

  • Flexibility of policy face-value

  • Flexibility of premiums

There still some tight restraints on the investment of the cash-value portion which does not allow you to invest in separate types of investment options (stocks, bonds, etc.) or to move your cash back and forth between these differing types of accounts.

 

Arizona Life Insurance Variable Policies

Arizona life insurance variable policies offer you more investment options to add more risk, but possibly more reward on your policy. It is another type of permanent insurance, but with more room to grow the policy. The death benefit will vary over time in accordance with the cash value investment. It gives you many of the other benefits of a whole life insurance policy.

 

Arizona Life Insurance Universal Variable Policies

Arizona life insurance universal variable policies offer the most flexibility and are thus the most complicated. It is a combination of a universal policy and a variable policy. The flexibility of this type of life insurance policy allows you to do the following:

  • Invest in separate accounts (money market, bonds, stocks)

  • Make withdrawals over life of policy

  • Premium flexibility

  • Tax-deferred cash accumulation options

The added flexibility means added responsibility. With this type of Arizona life insurance policy, you will have to manage the accounts on your own time and/or pay a financial advisor to help. A financial advisor is probably your best bet considering that the ultimate death benefit is contingent upon your ability to produce investment results.

 

Summary of Arizona Life Insurance Policies

With so many Arizona life insurance options to choose from, it does take some time and understanding to choose the right one for you. You can get help from an Arizona life insurance agent to evaluate the policies from your point of view. It may also be a good idea to talk to a long-term financial planner as well. The stage of your life, your income, and your family obligations along with a significant list of other variables should be considered when choosing your Arizona life insurance policy.

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