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What Types of Insurance Policies Are Available?
This article provides a snapshot of some of the most common types of life insurance policies: term life, whole life, fixed universal life, and variable universal life.
Term Life Insurance
Briefly, term life insurance is generally considered the simplest and least expensive form of life insurance coverage. It provides death benefit coverage at a guaranteed, consistent premium for a specific period of time—typically five to thirty years depending upon which term life product you choose. Since premiums for term life policies are low as compared to other types of life insurance, term life insurance is ideal for new families seeking affordable protection. While term life insur- ance doesn’t include the ability to accumulate cash value, it can help you maintain its lifestyle, cover college tuition and pay off a mortgage in the event of your death. Term life insurance:
• Provides protection only during the term of the policy, then the coverage ends.
• Offers a death benefit only; does not allow for cash value accumulation.
• Has a low premium that is guaranteed for a selected period.
At the end of the stated guaranteed period, premiums generally increase significantly to keep the policy in effect.
Whole Life Insurance
Like term life insurance, whole life insurance pays a fixed death benefit for a fixed premium amount. Generally, if the premium is paid on time, the policy will remain in force. But, unlike term life insurance which terminates at the end of the specific period, whole life insurance continues to cover the insured throughout his or her life. In addition, whole life insurance has a cash value feature that is guaranteed. You can access these cash values through policy loans for emergencies or other financial needs. Some whole life insurance policies may generate cash
Life Insurance Advantages and Disadvantages