While there are numerous types of life insurance policies that one can select from, all of them can be placed in one of the two general groups, “term” or “permanent”. A “term policy” is for a defined time period, like five, ten or thirty years, whereas a “permanent policy” has no time limit and lasts as long as one lives. Here, we will compare two insurance providers.
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Term Life Insurance Policies
Since term policies tend to be cheaper, they are more widely acceptable to people who are just starting their careers. It allows one to protect their family at a reasonably priced monthly rate.
Other people prefer to purchase term life policies that last as long as their mortgages or until other major outstanding debts can be paid off. When buying a term policy, one selects an amount they want their beneficiary to get in case they die before the term of the policy runs out.
The beneficiary gets the value provided all the premiums are paid. If one outlives the policy, then the amount paid into the policy is forfeited by the beneficiary.
Permanent Life Insurance Policies
A permanent life insurance policy, while more costly, allows more options. The most basic type is “whole life”, in which the death benefits and the premiums remain fixed provided all payments are kept current.
Insurance becomes more expensive and difficult to buy as one ages or develops health problems, so determining needs early on is beneficial. Other options include:
- Universal Life is a combination of insurance and investment. In this type of a policy, a certain amount of the premium paid earns interest. One has the option of selecting the amount they want to pay as the interest earning premium. The payment amount has to be more than the cost of the policy or there will be no interest earned.
- Variable Life gives one the option to invest the premiums in stocks, bonds, money market accounts or a combination of these. Proper management and investments can produce a comfortable retirement fund, or a fund from which money may be borrowed if needed. The death benefits remain fixed in this type of a policy; like all investments, the invested portion comes with its share of risks.
- Universal Variable Life provides one the flexibility of universal life, combined with the investment component of variable life.
The American Family Life Assurance Company (AFLAC) was established in 1955 by three brothers in six, rented rooms. At the end of their initial year, they had almost six and a half thousand policy holders and almost four hundred thousand dollars worth of assets.
The AFLAC now sells insurance policies in all the states of the United States and its territories, in addition to being the largest insurance provider in Japan. AFLAC is a Fortune 500 company responsible for selling insurance to millions of people around the world.
The AFLAC makes their insurance products available to the public through licensed agents. They enjoy a Standard & Poor’s and Fitch rating of AA (exceptional), a Moody’s Investor rating of Aa2 and A.M Best gives them a rating of A+ (Superior). It is a world reknowned company with strong financial standing.
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Oxford Life Insurance Co.
Oxford Life was established in 1965 in Arizona. Oxford sells life insurance products in 48 states, as well as in the District of Columbia. Other than the fact that AFLAC and Oxford both sell life insurance, that is where the similarity ends.
Oxford is younger than AFLAC by a decade and limits its services to the United States. Unlike AFLAC, it caters to the senior market. Oxford Life provides life, annuities, and Medicare supplemental insurance policies. One of its specialty products makes tax-free payouts to help anyone between the ages of 0 to 85 meet financial burdens.
This particular coverage can be acquired in varying amounts having a face value of $3,000 to $25,000. For people unable to afford this, they have another option with a graded death benefit payout valuing between $3,000 and $15,000.
Oxford Life makes insurance available to the “common man” with their cost effective policies. They enjoy an A.M. Best rating of “bbb+”. While this is not as good as that of AFLAC, it is still a very respectable rating and means that the company is financially sound and capable of meeting its debts.
AFLAC Vs. Oxford
Everything from protecting one’s loved ones, to using it as a financial planning tool are good reasons to purchase life insurance policies. Having a life insurance policy serves many benefits.
- When there are dependent like a spouse, children or parents that rely on one’s income, then in the event of death, a life insurance policy can replace the lost income. It protects the loved ones from financial ruin.
- Life Insurance can be an inheritance for heirs even when one has no major assets.
- It can help to pay for burial expenses, estate taxes and other financial responsibilities.
- It can be used as a way to save money and build a fund as some policies allow one to invest.
Choosing the Right Insurance Company
There are numerous companies like AFLAC and Oxford that sell life insurance products. Like in the case of AFLAC and Oxford, not every company sells the exact same products, nor do they always cater to the same group of people.
Different companies specialize in different areas and have different ways of operating. For example, companies that sell life insurance online tend to be cheaper than those that sell through agents, however agents are able to provide more personalized service that one cannot get online. Hence, it is important to shop around and find a company that best suits one’s individual needs before finalizing one that they are comfortable with.
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