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Types Of Life Insurance
There are different types of policies available. Shop around and compare policies to ensure that you receive the best deal possible. This sounds obvious, however, there are dozens of different types of life cover plans available and it is important that you select the right one for your circumstances. is insurance that provides protection against the economic loss caused by the death of the person insured. There are several types of Life Insurance, each having different characteristics. Some of the key types of are: Term Life, Whole Life, Burial Insurance, Survivorship Life, Universal Life, and Variable Life Insurance. Outlined below is a useful description of each type: Term Term is the lowest cost and simplest product available. Term insurance is a contract that provides protection for a limited number of years. The death benefit is only payable if death occurs during the agreed-upon term. There are various types of Term Insurance Life Policies: Level Term Life Insurancemeans that your premiums are set at a level at the beginning of the contract and do not move up or down. The sum assured will remain the same throughout the term. Increasing term insuranceThis is a fixed term policy where the sum assured will increase, either by a set percentage or by the Retail price index (RPI) throughout the policy term. Your premiums remain level throughout the term if the sum assured rises by a set percentage, or will rise according to the RPI if the sum assured does the same. Renewable term insurance This is policy lasting for a smaller period, usually five years, which can be renewed, although the sum assured cannot be increased, whilst the premiums will increase with age. Renewable increasable term insuranceis the same as above but provides for an increasing sum assured. Convertible term insurance provides the option to convert parts of the sum assured to whole of life, endowment or further term assurance without further medical evidence. Decreasing term insuranceis where the sum assured decreases
over time; hence, the premiums are set lower. This is commonly used to cover a mortgage. Whole Life insurance that remains in force during the insured's entire lifetime, provided premiums are paid as specified in the policy. Whole also builds a savings element (called the cash value) as a result of the level premium approach to funding the death benefit. Burial Insurance Burial Insurance, or Final Expense Life Insurance, is essentially a whole life product with small face values. The application process is simple and does not have the associated medical requirements of other policy types. This type of is also referred to as a simplified issue or guaranteed issue policy. Survivorship A type of whole which insures two people and pays benefits only after the second person dies. It is generally designed to provide funds to pay estate taxes. Universal An unbundled whole product in which the mortality, investment, and expense factors used to calculate premium rates and cash values are expressed separately in the policy. In a universal policy, any applicable expense charges are deducted from the premium and the remainder of the premium is then credited to the policy's cash value. Each month the insurer deducts the mortality costs from the cash value and credits the remainder of the cash value with interest. Variable A form of whole under which the death benefit and the cash value of the policy fluctuate according to the investment performance of a separate account fund. Most variable policies guarantee that the death benefit will not fall below a specified minimum. A minimum cash value is seldom guaranteed. You may freely reprint this article provided the author's biography remains intact:.
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