The Different Kinds of Life Insurance

In the event of death, life insurance can help the holder provide financial security to his family. Life insurance has two types and these are term and permanent life insurance. These cater to the different needs of the policy-holder.  Permanent life insurance has two forms, and these are the whole life and the universal life insurance.



Term life insurance has coverage for a specific period of time. This type of life insurance will cover either 5, 10 or 20 years and will depend on the premiums paid. The insurance policy is terminated after the term ends. This does not have a cash-value account unlike the permanent life insurance.

Whole life insurance quotes are viewed as the traditional policy and lasts forever as long as the premium payments are not delayed. It gives death benefits and cash returns. Following the payment of insurance costs, the insurance company invests what is left of the premiums. The minimum return rate and the performance shall be then credited to a cash value account that is tax-free.

The universal life insurance is also a permanent life insurance policy that gives the policy holder options to choose from with regards to benefit amount and premium payments. Under this life insurance scheme, there are two available options and these are Options A and B. Option A will provide a death benefit using the cash value account. The premium payments are low and the company remunerates minimal insurance payments. As for Option B, the holder shall be given death benefit and the cash value account, thus he receives a bigger payout. This entails bigger premiums however than Option A.

There is a difference between the whole life policy and the universal life policy. The former does not reveal information about rate of return calculations, mortality costs, investment options and administration charges. The universal life insurance will divulge these details so that the policy-holder would be able to review them properly. The latter also gives the owner the ability to alter payment schedules, skip premiums, and decrease or increase premiums as long as a lapse in payment does not happen. For the whole life policy, the date for the payment of premiums must be met on time or else the policy is forfeited.

It is important to consider some factors when one wishes to purchase life insurance. The term life insurance policy is ideal for young people who do not have a family to take care of or mortgages to pay. They are also for people whose children will become grownups in a year or two. The permanent life insurance policy is for adults who have responsibilities such as a family to take care of, those who would like to leave an inheritance for their family, and those who would like to save money in preparation for their retirement.

If one wants to get a life insurance policy, he must ensure that he does not engage in dangerous hobbies and occupations such as sky-diving, car-racing, fighting in a war or frequent traveling. Once an insurance company is informed about such risky activities, it may deny an applicant of getting coverage. Even if the applicant is healthy, his lifestyle still plays a big role.

A person should know what he wants and assess his future before getting these different kinds of life insurance policies.