There are four different life insurance policies: whole life, universal life, term and endowment. Which Life Insurance Cover is Right For You?
Variations on these policies mean that anyone should now be able to get the life insurance cover they want as they can be used in combination to personalize your life insurance.
Whether you want to pay higher premiums for a few years or are happy to pay into the policy for many years, and whether you are looking to leave money to your spouse and children after your death or whether you are looking to accrue a payment for some kind of investment like a home or a college education, you can find a life insurance policy that meets your needs.
Whole life insurance
Whole life insurance cover has a stable premium and also a guaranteed cash value, both indicated within the insurance contract. Advantages of whole life insurance are its guaranteed benefits in the event of the death of the insured, the fact that premiums are known and fixed, and that expenses and death do not reduce its cash value. The disadvantages of whole life insurance are the inflexibility of its premiums, and the fact that the payout might not be as high as with other insurance.
Universal life insurance
Universal life insurance cover is a newer type of permanent life insurance designed to provide more flexibility in the premium and it pays out more in the end. This type of policy can also include a cash account. The interest collected is paid to the policy at a specified rate. Administrative costs and mortality charges are charged to the cash account. The variable universal life insurance policy is a different type of permanent insurance, quite unlike a universal life policy. The difference is in the management. The cash account attached to the variable life policy is held in a separate account, as with mutual funds.
Limited life insurance
Limited life insurance is different again, with premiums only payable for a specified amount of time in order to maintain the policy. Endowments are different again. The cash value is increased inside the policy. They are usually more expensive than other forms of insurance coverage because the premium payment schedule is shorter and maturity much earlier. Endowments are paid whether the insured dies or lives, after a specified period. That makes them good for paying for planned investments: children’s college education, for example. Accidental death life insurance covers an insured person should they die as a result of an accident.
This type of coverage can also include injuries, dismemberment or loss of bodily functions like hearing and sight, but it does not usually cover suicide or death from long term medical conditions. These are less expensive because they only cover accidents and usually don’t pay a benefit. They also generally do not cover situations in which the insured puts oneself at risk, including war involvement and extreme sports. There are two forms of term life insurance. Level Term Life Insurance allows you to make a fixed monthly payment for the entire length of the policy.
Level Term Life
Level Term Life Insurance policies can be taken out in varying lengths. This type of insurance is quickly losing popularity because it is inflexible. Unless you add riders to the policy, it is really only good for short-term expenses such as financing college. It will not provide for your family long term. Decreasing Term Life Insurance lowers your monthly payments the longer the policy is in effect. Decreasing Term Life Insurance policies are typically used to cover outstanding debts upon your death. So, there is life insurance cover for various scenarios. Assess your needs and select the one that is right for you.