Guidelines To Choose The Right Kind Of Life Insurance Plan In California

There are some significant differences that distinguish these two types of plans from each other. Term insurance policies are valid over a given term or period that is pre determined in the policy document. The period can be brief as one year or a fixed number of years ranging from 5 to 30 years. The term can also be customized by the subscriber up to a particular age. If the subscriber dies during the term of the policy, the insurance carrier will pay out the face value of the policy to the dependents surviving them. If the insured continue to live beyond the term of the plan, no amount is payable to them. 
The underlying fact is that term life insurance policies offer death benefits, but do not feature any savings element or cash value. Usually, the price of these policies are considerably very less and therefore will suit people who want coverage for a specific amount of time and have a limited money to spend on their life insurance plans. If you need life insurance coverage only for a specific period of time, then term life insurance plans can give you more coverage for a lesser spending. The cost of term life insurance plans go up as you grow older making it more expensive than cash value insurance in the long run. 
Term policies marketed these days come with two kinds of premiums namely guaranteed maximum premiums and current premiums. Though current premiums are considerably much lower, they can be changed at the will of the insurance firm. However, the insurance carrier cannot increase the current premium beyond the value of the guaranteed maximum premiums mentioned in the policy. While choosing a term insurance plan, you need to decide for how long you want the insurance coverage. Over the periods specified in the policy, you can choose to renew it without any medical examination. Also, there is a provision to covert some kinds of term insurance plans to cash value plans up to a specific age without any medical examination. In this case, you will have to pay a higher premium after the change is made.  If you fail to pay the premiums, the term life insurance policy will lapse without a cash value, while permanent types of policies come with a cash value. 
Very interestingly, cash value insurance plans combine death benefits with cash value accumulation feature. If a cash value term life insurance policy is surrendered before the term, the subscriber will get a particular cash value paid. However, there will be a substantial deduction in terms of penalties and therefore, doing this is not generally advisable. If all the premiums are paid over the term of the plan, the plan pays out death benefits to the beneficiaries mentioned in the policy upon the death of the subscriber. One another advantage of cash value term life insurance plans is that the subscriber can make use of the cash value as loan collateral to borrow funds. In this case, the interest rate is specified in the State of California Department of Insurance policy. During death or policy surrender, all the outstanding loans are deducted from the total amount payable. 
In this way, California residents need to make an informed decision while shopping for a life insurance plan and need to consider several factors before choosing a plan.