Life Insurance Types
Types of Life Insurance Policies: Money-Saving Tips and Guidelines when Shopping for a Life Insurance Policy
Taking out a life insurance policy may serve several purposes for an insurance holder. An insurance policy is a product that a policy owner needs to pay for a period of time. Premiums are paid for more than a year and even require some policy owners to pay insurers for the rest of their lives. It is also a form of investment, as some life insurance policies offer cash value and returns for additional money that is paid together with premiums. Despite the variety of features that are offered by the different types of life insurance products, they all offer one guarantee that policy holders are all-willing to pay for- financial security for family members and loved ones who will be left behind.
Different Types of Life Insurance
Life insurance falls under multiple categories:
Shopping for a life insurance policy is a difficult task, especially among those who aren't too familiar with how the insurance industry works. There are many types of life insurance policies to date, making it more difficult for customers to make a wise and sound judgment as to which is the best policy for their needs and preferences. Before you go to an insurance provider's website to scan over the information that they provide, it is best to equip yourself with factual, unbiased, and accurate information about the many life insurance policies offered on the market today.
Basically, life insurance is a legal binding contract between an insurance provider and a policy owner. The stipulation is that an insurer (insurance company) will pay death benefits to a policy owner's beneficiary upon the insured's death, so long as the policy owner makes a lump sum premium payment or regular premium payments over a specific number of years.
When choosing a life insurance type for you, or for a loved one, it is but wise to base your purchasing decision according to your probable needs in the future and your current financial condition. This will result in maximum utilization of benefits in the future without having to break the bank at present time.
Term Life Insurance Policy
Majority of Americans are known to purchase term life insurance policies. Over half of insurance policy holders in the country have term life insurance under their name. Here are important facts that you need to remember about term life insurance. These pointers will help you in making an important decision when shopping among the different types of life insurance available today.
- Term life insurance is a classified as a temporary form of insurance
- Regular premium payments are level or may increase as policy owners age
- The face value of a term life insurance policy is fixed or may decrease over time
- Runs for a specific length of time, thus the name Term Life Insurance
- Renewal is a must when term expires to make sure benefits can still be obtained by the beneficiary
- Non renewal means no benefit will be rewarded to the beneficiary if death occurs beyond coverage period
- Beneficiaries are only paid pure death benefits and nothing else
Permanent Life Insurance Policies
Life insurance policies that fall under permanent life insurance are those that require policy holders to make recurring or lump sum premium payments until maturity date. A permanent life insurance policy matures either during an insured's death or upon a stipulated maturity date. The most distinguishing feature of permanent life insurance products is the presence and generation of cash value. A lot of people are now investing more on whole life and universal insurance because of this income-generating feature.
Whole life insurance is a permanent life insurance features:
- Death benefit is a guarantee aside from the cash value that a policy holder can borrow and receive while still alive
- Premium payments are level and remain unchanged despite the growing amount of cash value
- cash value that can be borrowed is tax free
