Types of Life Insurance
Types of Life Insurance
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Term Life Insurance.
If you are financially challenged or a great saver, you can opt for a simple life insurance. Term life insurance allows the beneficiary death benefits for a specific period or ‘term’. This term may be 1 or more years and the benefits are paid only in the event of death of the policy holder within the term of the policy.
Some term life insurance that can be renewed for one or more additional terms. If you do so, your premiums may go higher. You may be allowed to trade your term life insurance for a whole life insurance policy.
There are 5 types of Term Insurance:
1. Annual renewal term insurance: Allows you to renew your term insurance every year until you reach a specific age.
2. Renewable term insurance: When the term of the policy (generally 5-20 years), expires you can automatically renew the policy even if your health condition has worsened. It is similar to the annual renewable policy but for a longer period of time.
3. Level premium term insurance: Ensures that your premiums will not go higher for the term (usually between 5-20 years) of your policy.
4. Decreasing term insurance: Allows your premiums to stay level throughout while decreasing your cash benefits each year. Such policies usually are used to cover items whose costs lessen with time.
5. Convertible term insurance: With this policy you can convert your term insurance into another type of life insurance policy that the company offers.
Whole Life Insurance.
A whole life insurance covers a policy holder for his entire life. There is no date of expiry like in a term life insurance and the death benefits will be received by the beneficiary mentioned in the policy only in the event of the death of the policy holder. When you buy a whole life insurance you will pay a higher premium as compared to a term life insurance. A certain portion of the premium paid for whole life insurance is put away into a savings program.
When you compare the total premiums paid for whole life insurance and the total premiums paid for term life insurance it is seen that whole life insurance is less expensive. Even if you pay higher premiums for whole life insurance, the fact is that the premiums remain the same throughout the tenure of the insurance. But in the case of term life insurance, you may be paying lesser premiums in the beginning, but as you renew your term policy, the premiums will increase. The total value accrued in term policy is bigger than with whole life insurance.
Certain clauses in a whole life insurance allow you to pay premiums for a lesser period of time. The greatest advantage in this policy is that the premiums develop cash values that may be claimed or used for purchasing rider policies for more protection. Few of the whole life insurance benefits are:
Guaranteed death benefits
Fixed annual premiums
Guaranteed cash values
A whole life insurance also known as “straight life” or “ordinary life” insurance, is an investment for your future and also for the future of your family.
Universal Life Insurance.
Universal life insurance is a flexible policy that provides security for you and your family. Universal insurance will vary from company to company.
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