Are There Different Types of Life Insurance?
Although there are many types of life insurance policies, nearly all are variations of two basic types: Term Life Insurance and Permanent Life Insurance. Term Life Insurance is exclusively death coverage. These types of policies are written for a specific length of time (term): one year, five year, ten year, twenty year, or thirty years for example. If the insured dies during the term of the policy, assuming the premiums are paid, the death benefit is paid to the beneficiaries. If at the end of the policys term the insured is still alive, the coverage either ends and no benefit is paid. Coverage may be renewed or replaced. If renewed or replaced, the premium for the new term will be adjusted higher based on the current age of the individual. We usually think of term insurance as a tool to purchase less expensive protection for a specific amount of time, to cover temporary extra expenses. (Perhaps to cover a mortgage or college expense if you were not here to provide) Permanent Life Ins
Basically, there are two types of life insurance that satisfy many different needs: Term insurance – Term insurance products offer short-term protection at the lowest initial cost. Medical examinations are often not required for enrollment. You pay only for what you need, and for the length of time you need it. Permanent insurance – Permanent insurance products offer lifetime protection, can build cash value and provide a death benefit. The enrollment process is more involved and the premiums initially can be higher than for term insurance but do not usually increase over time. Term insurance Term life insurance is well suited to meeting high, short-term protection needs for the lowest initial cost. For example, a couple with young children and/or a mortgage might select term insurance as an affordable way to obtain the full coverage they need today. Many term plans are renewable without providing proof of health. The price will increase with your age at each renewal point and coverage
Essentially, two types of life insurance satisfy most needs: Term insurance – Term insurance products are suitable for meeting high, short-term protection needs at the lowest initial cost. Permanent insurance – Permanent insurance products offer lifetime protection, can build cash value, and provide a death benefit. Term insurance Term life insurance is well suited to meeting high, short-term protection needs for the lowest initial cost. For example, a couple with young children and / or a mortgage might choose term insurance as an affordable way to obtain the full coverage they need today. Most Term plans can be renewed without providing proof of health. Premiums at renewal will increase in accordance with your age, and can become substantial in later years. Coverage ceases for term contracts once you reach the age of termination outlined in the policy. When assessing the cost of term insurance, be sure to consider both the initial premium and the renewal rate. Also, consider whether
