Types of Life Insurance

 Term Life Insurance policy is for when there is a short-term need like covering the mortgage or the kids’ education expenses. There is 2 types of term insurance.

1.  Level term / level premium this plan is a guaranteed level premium policy for periods of 10,15,20 or 30 years. If you died within the period of policy your beneficiary receives the death benefit. However, if you outlive the policy, the coverage ends, and you don’t get any money.

2.  Return of premium Life insurance, this plan give you the options of 15,20 or 30 years. The annual premium is fixed and if you outlive the policy, the coverage ends, and you get back some or all the premiums you paid. 

Permanent Life Insurance refers to coverage that does not expires and provides lifelong insurance protection. This type of policies combine a death benefit with a saving component and here are the different types and some of their characteristics. 

WHOLE LIFE INSURANCE

This is one of the most common type. The premium will pay a death benefit and may also build cash value that can be accessed in the future to use for education expenses or even buying a second home. 

UNIVERSAL LIFE

This one offers flexibility. For instance, you may increase your death benefits or reduce your monthly premium once you accumulate sufficient cash value in your policy. One of the disadvantages of doing this is that if you apply your cash value to the premium you policy may lapse.

INDEXED UNIVERSAL LIFE INSURANCE

When you purchase an indexed universal life policy the money in your cash value may earn interests based on a stock market index. On the other hand, most index universal life include a minimum interest rate guarantee.

VARIABLE UNIVERSAL LIFE INSURANCE

This type of policy offers flexible premium, flexible death benefit and it also includes different investment options, that can help increase the cash value of the policy. One disadvantage is that yes, you can earn more cash value, but you can also lose more.