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Types Of Life Insurance
By: John Mussi
There are different types of life insurance 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.
Life Insurance 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 Life
Insurance 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 Life Insurance
Term Life Insurance is the lowest cost and simplest product available. Term
insurance is a life insurance 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 Insurance
means 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 insurance
This 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 insurance
is 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 insurance
is where the sum assured decreases over time; hence, the premiums are set lower.
This is commonly used to cover a mortgage.
Whole Life Insurance
Life insurance that remains in force during the insured's entire lifetime,
provided premiums are paid as specified in the policy. Whole life insurance 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
life insurance is also referred to as a simplified issue or guaranteed issue
policy.
Survivorship Life Insurance
A type of whole life insurance 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 Life Insurance
An unbundled whole life insurance 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 life insurance 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 Life Insurance
A form of whole life insurance 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 life insurance policies guarantee that the death
benefit will not fall below a specified minimum. A minimum cash value is seldom
guaranteed.
About the Author:
John Mussi is the founder of Direct Online Loans who help UK homeowners find the
best available loans via the www.directonlineloans.co.uk website. |
