Different kinds of life insurance policies
There are scores of life insurance policies options available today. Some of the most common ones are-1. Temporary life insurance
The Temporary life insurance is also known as the Term life insurance or 'term assurance'. This policy provides for the insurance coverage of a specified term or limited number of years. The policy does not accumulate cash value and premiums here buy the policy holder protection for death and nothing else. There are three elements which should be considered here. These include the term or the length of coverage, the premium to be paid and the benefit of death or the face amount.
2. Permanent life insurance
This form of life insurance continues to be in line till the policy pays out or matures. This can also happen if the policy owner fails to pay the premium when due. This policy cannot be canceled by the insurer except for fraud cases. This policy helps to build cash value that reduces the amount at risk, to the insurance company and also reduces the insurance expense over time. There are three kinds of permanent insurance. These include the whole life insurance, universal life insurance and endowment.
a) Whole life coverage
In this form of insurance there is a level premium and a cash value table. The main benefit of this insurance is that it guarantees death benefits, cash values, fixed and annual premiums along with mortality and expense charges. But the disadvantage of the same is that the premiums are inflexible.
b) Universal life insurance policy
This life insurance policy is similar to the whole life insurance policy. The universal life insurance provides with an investment component which most policy holders seek. These universal life insurance policies are generally less expensive as compared to the whole life insurance policies. Those who want cash value accruement like the whole life policy but can‘t afford to buy one can opt for this policy. But the coverage here can end if the payments for the same are not made or if the accounts go low.
c) Endowments
In the endowments policies the cash value built up inside the policy is equal to the death benefit or the face amount, but only after a certain age. This age is known as the endowment age. These endowments are more expensive in terms of annual premiums because the premium payment period is shorter and the endowment date is also earlier.
Selecting the right policy
Selection of these policies should be done after gather adequate information and knowledge because these policies have different terms and conditions which should be scrutinized.
