Types of Life Insurance
This is the comprehensive list of Life Insurance you should know
Term Life Insurance
The most popular an inexpensive of the types of life insurance policy is term life insurance.
Term means you purchase coverage on a certain timeframe, such as 10 –
30 years of life. Your beneficiaries will receive payment only if you
die within the selected timeframe. It typically provides the best amount
of coverage for the lowest premium payment of all types of life
insurance available. It is best to buy when you are under 40 years old,
as it may be more expensive if purchased at an older age. Once the term
ends, you must renew or lose your insurance. Keep in mind that if you
renew, your premium payment may increase.
Whole Life Insurance
Whole life insurance
is one of the types of life insurance policy that covers your entire
life. It pays the death benefit and may provide a cash value that is
redeemable. It never has to be renewed and your premium will remain the
same for the entire lifespan. There are dividend-paying whole life
polices that are usually offered by mutual life insurance companies.
These policies offer refunds on insurance premiums that exceed a
specific level. Keep in mind that premiums for dividend-paying policies
are typically higher than those for regular whole life insurance
policies.
Universal Life
As one of the types of life insurance policy available, universal life insurance
offers more premium payment flexibility and growth in cash value,
unlike whole life insurance. Your monthly premium payment will be set
based on your cash value and the cost of your death benefit and expenses
are deducted. Your cash value is tax-deferred, and you can borrow money
or make withdrawals at any time.
Variable Life Insurance
There are two types of life insurance
policy when it comes to variable life insurance – variable universal and
variable whole. With a variable life insurance policy, your cash values
and death benefits will vary depending on the performance of the assets
from your premium payments. Some variable life insurance polices will
offer a guaranteed minimum death benefit, but it may come at an
additional cost. Variable universal life will let you pick the
investment for your cash value. This may present an additional risk
depending on the type of investment you make. Variable whole life offers
the ability of your death benefit and cash value to be based upon the
performance of the investment you choose. As with variable universal
insurance, you have the potential for greater growth, but it comes with
risks.
Knowing which of the types of life
insurance policy is important in putting you at ease and your family’s
future expense free, should you die unexpectedly.
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