Term Life Insurance Articles
Evaluating The 3 Major Types Of Life Insurance
2012-01-31
Life insurance is popular in the United States, as various types of insurance policies can provide excellent financial protection for households regardless of their budgets. There are three major types of life insurance: universal life insurance, whole life insurance and term life insurance. Before shopping for coverage, it's important to understand the differences between these products, as it's impossible to compare rates and death benefits for completely different types of insurance.
Universal and whole life insurance are similar, as they both provide a return on the policyholder's investment. Universal life insurance policies are much more flexible, however. Policyholders can decide to pay more than the minimum payments in a universal life insurance policy to increase the death benefit associated with the policy. They can also pay extra to put funds into a cash accumulation fund, which allows for better investment. In a standard whole life insurance policy, the policyholders and insurance companies decide on death benefits, a premium schedule and cash accumulation before the policy starts. As such, a whole life insurance policy might offer better coverage at a lower price, depending on how regularly the policyholder is willing to make larger-than-required payments.
Term life insurance is much less complex and is not really an investment, as at the end of a term life insurance policy, the insurance company won't pay back any premiums to the policy holder except in very specific circumstances (for instance, if the policy is a Return Of Premium policy). When a term policy ends, so does its coverage. The advantage of a term life insurance policy is that it's much less expensive than the other options, so it can be especially useful for planning purposes. Many buyers use term life insurance policies to protect their other investments. For instance, if a buyer has a retirement account that matures when the buyer is 65, he or she might buy a term life insurance policy that will expire at that age. The low premiums of term life insurance policies also make it easier for buyers to purchase larger amounts of coverage. Most term life insurance policies last for five to 30 years, although annual policies are also available from insurance providers.
There are dozens of variations of these main policy types, including term life insurance policies designed to protect mortgages, whole life policies sponsored by employers and many others. However, these three major types of life insurance are the standard in the United States. By deciding on a type of life insurance, buyers can start to compare rates, reducing the cost of their insurance policies while locking in excellent coverage that will help them accomplish their financial goals.
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Life insurance is popular in the United States, as various types of insurance policies can provide excellent financial protection for households regardless of their budgets. There are three major types of life insurance: universal life insurance, whole life insurance and term life insurance. Before shopping for coverage, it's important to understand the differences between these products, as it's impossible to compare rates and death benefits for completely different types of insurance.
Universal and whole life insurance are similar, as they both provide a return on the policyholder's investment. Universal life insurance policies are much more flexible, however. Policyholders can decide to pay more than the minimum payments in a universal life insurance policy to increase the death benefit associated with the policy. They can also pay extra to put funds into a cash accumulation fund, which allows for better investment. In a standard whole life insurance policy, the policyholders and insurance companies decide on death benefits, a premium schedule and cash accumulation before the policy starts. As such, a whole life insurance policy might offer better coverage at a lower price, depending on how regularly the policyholder is willing to make larger-than-required payments.
Term life insurance is much less complex and is not really an investment, as at the end of a term life insurance policy, the insurance company won't pay back any premiums to the policy holder except in very specific circumstances (for instance, if the policy is a Return Of Premium policy). When a term policy ends, so does its coverage. The advantage of a term life insurance policy is that it's much less expensive than the other options, so it can be especially useful for planning purposes. Many buyers use term life insurance policies to protect their other investments. For instance, if a buyer has a retirement account that matures when the buyer is 65, he or she might buy a term life insurance policy that will expire at that age. The low premiums of term life insurance policies also make it easier for buyers to purchase larger amounts of coverage. Most term life insurance policies last for five to 30 years, although annual policies are also available from insurance providers.
There are dozens of variations of these main policy types, including term life insurance policies designed to protect mortgages, whole life policies sponsored by employers and many others. However, these three major types of life insurance are the standard in the United States. By deciding on a type of life insurance, buyers can start to compare rates, reducing the cost of their insurance policies while locking in excellent coverage that will help them accomplish their financial goals.
