The purpose of life insurance is to provide your family with the same amount of financial comfort that they currently enjoy in the event you should die. Life insurance can provide your dependents with the ability of paying off a mortgage, sending children to college, or paying for your burial and funeral expenses. There are many different coverage options when it comes to life insurance. Variable life, universal, whole and term life insurance policies are available. Here is a look at the different types of life insurance policies that are available.
Whole Life
There are fundamentally two different basic types of life insurance: term and permanent. When it comes to permanent life insurance, the simplest type of coverage is whole life. Policyholders enjoy an option for cash value as well as a death benefit along with guaranteed consistent premiums and lifelong insurance protection. Having an option for cash value means that your policy builds up value over time. This augments the death benefit. In addition, you will have the means to either borrow against or withdraw funds from your insurance policy’s cash value whenever you want to.
Variable Life
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Variable life is another type of permanent life insurance. It offers flexible terms and many investment opportunities. The feature that is most unique when is comes to variable life insurance is that the policies allow the policyholder to adjust, to a certain extent, the death benefit on the policy and the timing and size of the premiums. You are able to choose, in other words and within certain limits, the amount you pay for your policy as well as how large the death benefit is at a given point in time. In addition, you are able to investment a portion of your insurance premiums into fund options managed by professionals.
Universal Life
Another type of permanent life insurance is universal life. It can offer you with guaranteed, inexpensive protection along with optimal flexibility. Policies for universal life insurance provide you with the ability of changing your death benefits and premiums within certain limits. You also have the ability of choosing to either pay cheaper premiums to concentrate on the guaranteed death benefit or increase the cash value on your policy. With universal life, remember you need to pay higher premiums when your policy’s cash value growth ends up being less than was expected. The cash value of your policy grows in accordance with fixed interest rates that are periodically adjusted. If the rates go down, your premium cost increases to make up the difference in value.
Term Life
The only type of life insurance that doesn’t offer permanent protection is term life. This type of insurance allows you to purchase a fairly high amount of insurance coverage to last for a specific time period. For example, for 10, 15 or even 25 years. When the policy expires, there is the option to renew. However, as you age the premium cost increases.
Convertible Life Insurance
This form of insurance provides you with an option of converting term life insurance into permanent life. If you think you might need to change this in the future, it can be a good option to have. The coverage will help to prevent you from having to pay higher premium costs when you switch your policy.
