There are two types of life insurance: Term Life and Whole Life. Term Life Insurance charges the policyholder a fixed monthly premium until the end of the policy, for a particular fixed death benefit, if the policyholder should die during that term. This type of life insurance is not meant to insure someone until they die, but instead, it protects against income loss or continuing debt. This includes a mortgage, and it does so through increments of five to ten years. Providers authorize terms of 5, 10, 15, 20, and even as much as 30 years. Term Life is also suitable for replacing any of your income over a period of time, such as the years you spend raising your children or paying off your mortgage. However, something important to understand is that Term Life insurance will not pay out if the policyholder doesn’t die within the term limit. This type of insurance is unsuitable for those who have a long life ahead of them or do not suffer from income loss or financial problems, or for those who are healthy and do not suffer from any long-term health conditions. Furthermore, Term Life is also affordable and can be transferred into a permanent life insurance policy in most cases.
Whole Life Insurance, on the other hand, is useful for those who want to leave money for their beneficiaries to pay their inheritance and or estate fees. It’s also suitable for those who have a dependent who is young, such as a child, especially ones with disabilities. Your Whole Life insurance plan can help you create a fund to pay for any expenses to your child when you pass. It’s useful for those who want to spend their retirement money but still have funds for the inevitable funeral cost. Whole Life Insurance can also benefit those who want to leave money to more than one beneficiary, such as a business or more than one child. Another positive point for Whole Life Insurance is not worrying if you die before the policy expires. No matter when you pass, it will pay out to those you’ve left behind.
Besides these two life insurance policies, there are more to consider. For example, there is Universal Life Insurance. This insurance company pays the interest that is based on the current stock market rates. Something interesting about Universal life insurance is that any excess of the premium payments on top of the insurance cost is then credited to the cash profit of the policy. Another type of insurance is Variable Life Insurance or, as it’s also known, Variable Universal Life Insurance. This insurance gives the policyholder access to direct deposits into the stock market itself. Then there is the Indexed Universal Life Insurance. This insurance is permanent life insurance, which means that it has a cash benefit besides a death payout. Such lucrative stock market companies can trade this type of life insurance as S & P 500 or the Nasdaq Composite.
Supplemental Life Insurance is another type of insurance that can be placed on top of other life insurance policies, such as term, whole life, or even universal life insurance. This type of life insurance is for a particular purpose, such as protecting payments toward a mortgage, in case the breadwinner passes. Supplemental Life insurance plans depend on the policyholder’s age, needs, as well as specific demands.
The next type of life insurance is Variable Life insurance. This type of life insurance helps build a cash value. The cash value can be invested in numerous ways, such as separate accounts, which the contract owner chooses.
For those who need life insurance immediately, there is Simplified issue insurance. This type of life insurance can be obtained with only minimal health questions. It is for those who do not want to take any kind of medical exam.
Another type of life insurance is Guaranteed issue life insurance. This life insurance doesn’t require a medical exam to qualify. This insurance has a catch, however. It does not cover any death payout for the first one to three years. Despite this, Guaranteed issue life insurance will return the policy’s premiums in addition to a 10% interest if the policyholder dies within this time period.
Group life insurance is a type of life insurance covering a group of people, just as a name implies. Most of the time, the policyholder is an employer or a labor union organization.
Final expense life insurance is insurance for those at the end of their lives. It covers final medical expenses and funeral reparations. However, this type of life insurance costs more than term life insurance. Nonetheless, it can be essential, especially if the policyholder does not have investments or money set aside.
For those who need long-term care, there is Hybrid life insurance or Hybrid long-term care policy. This type of life insurance combines the perks of life insurance (or annuity) with long-term care benefits. An individual can purchase a Hybrid long-term policy by paying it in total or, as most life insurance policies, pay a monthly fee.
Aside from these types of life insurance, there is individual life insurance and employer-based life insurance. Individual life insurance covers the individual and employer-based covers employees. In today’s world, there are fewer employers offering life insurance to their employees.
The different types of life insurance can be overwhelming to individuals or families who are not familiar with what this type of insurance provides its policyholders. Therefore, before purchasing a life insurance policy, it is beneficial to investigate what companies offer the best rates and the most coverage. No one wants to think about losing the ones they love, but death is inevitable, and therefore, life insurance is there to help ease the pain. The most crucial factor to remember is that you are purchasing this type of insurance not only to cover the expenses of a funeral but to cover the ones you love by providing them the security a life insurance policy can afford.