An Overview of Different Types of Life Insurance

In this day and age, having some kind of life insurance policy is important so that you would be secure that you and your family would be covered from personal risk exposures and in unexpected and unfortunate situations. There are actually several types of life insurance policies and it is important that before choosing which one to get, you know the terms and coverage of each one. Here are the types of life insurance plans.

1. Whole Life Insurance

This type of life insurance covers provides a guaranteed insurance protection for the insured individual’s entire life. It has a “cash value” component which grows at a contractually guaranteed amount (tax deferred) until the contract is surrendered. The insurance company is usually the one that makes all the decisions associated with the policy. Some of the advantages of whole life insurance would include: guaranteed death benefits; fixed and known annual premiums; guaranteed cash values; and the mortality and expense charges would not reduce the ash value which shown in the policy. However, whole life insurance does have some disadvantages such as the inflexibility of the premium. The internal rate of return might also not be as competitive as the other savings alternatives.

2. Universal Life Insurance

This is a relatively new type of insurance in the market and is intended to provide permanent coverage with more flexibility in the premium payment and a potentially higher internal rate of return, depending on the premium payments. Some of the types of universal life insurance plans include traditional fixed universal life insurance, equity indexed universal life insurance and variable universal life insurance.

3. Term Life Insurance

This is one of the more common life insurance policies. Term life insurance can provide protection for your dependents or beneficiaries from financial loss that could result from your death. However, protection is provided for a definite and limited amount of time. This is type of insurance does not build cash value and usually has a maximum term period of 30 years. Some of the variations of term life insurance policies include: annual renewable and convertible term, level term and decreasing term.

These are some of the types of life insurance policies that you can choose from. To help you decide on which one would be most suitable for you, it would be important to first assess your financial needs and your primary reasons for getting a policy before requesting life insurance quotes.