What are the different types of life insurance available? There are many different types of life insurance available, such as:
- term life
- variable life
- unit linked
- permanent life
- permanent par life
- permanent long par life
- universal Life
- whole life
- max protection policy
- protection only
- investment plans
- renewable term life
- convertible term life
- cash value plan
- profit bonds
- maximum investment plans
- whole time
- premium policy
Description of Life Insurance Type
Confuse yet? hmm.. well, there’s no need to panic. Life insurance products face the offer protection which can be temporary or permanent, as well as structured savings and investment plans which are optional. All policies, involve you paying a premium and all will make a guaranteed payout to your beneficiaries when you are no longer with them. in addition, they can be modified with a range of additional options to protect you and your loved ones from other unforeseen circumstances.
The simplest and least expensive form of life insurance is temporary or term life insurance. This type of policy is purchased for a specified period of time. It is therefore often used to protect your dependents during periods of higher financial commitment, such as when paying a mortgage or while your children still depend on you financially. If something happens to you during that period, your loved ones will receive a guaranteed amount, but if the policy isn’t used any money is returned.
Permanent or whole life insurance gives your loved ones financial protection against your death throughout your entire life. It offers more protection and peace of mind because it doesn’t run out. Think of it as a pension plan for your spouse when you are no longer around to take care of them. Just as with term insurance, your loved ones will receive a guaranteed amount when you are gone. In addition, to protection insurance policies can include a way for you to save every month through your premiums.
Endowment insurance offers financial protection for your loved ones for a specified period of time and pays out a guaranteed lump sum once a contract ends. For example, if you are saving up for a college fund, or are putting money away for your retirement an endowment, the insurance policy can pay out the agreed amount when you reach 60 years. But if you were to die before that, your loved ones would receive the full amount you’re insured for. This way, no matter what happens to you your savings are protected. If you are prepared to take some risk, you can also choose to invest part of your insurance premium with the view to benefiting from any stock market gains during the time that you’re insured. In this way, you can build some capital while protecting your loved ones in case something happens to you.
Investment-linked life insurance uses some of your premium to purchase units in funds. The value of your policy is therefore in part determined by the performance of these investments. If your investments work well the value of your policy will increase, but if not its value will decrease. However, the sum that your family receives upon your death is exactly the sum you agreed in the policy and is not affected by the fund’s performance.
Whatever type of policy you choose, it’s possible to purchase additional protection and flexibility in the form of riders, which improve the range of your coverage and protect your dependents against events, not mentioned in the original policy. This additional protection can be added or canceled at any time without affecting your life insurance policy. For example, accidental death benefit doubles the amount your dependents will receive to help them deal with the financial burdens of their unexpected loss if your life were to end prematurely, as the result of an accident for instance. A waiver of premium will continue to pay for your life insurance premium, in case you are suddenly unable to keep up the payments yourself, due to a disability. This means your loved ones are still protected, even if you can’t keep up with your premium payments.
A critical illness benefit, ensures you receive an immediate payout if you were diagnosed with the terminal illness so that you can get the right treatment and care you need. This is one case where having life insurance can actually save your life. A disability benefit would do the same in case you too become disabled, or allow you to make the necessary changes in your life to cope with your disability.
As everyone has different needs and funds available it’s important to review all your options and to make a decision based, on what’s right for you and your loved ones.