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Life Insurance

There are many types of life insurance policies. The parameters to classify them are number of years, premium amount, and benefits covered. The two major types of life insurance policies are term and permanent life insurance. These policies underlie some more types.

The Term Life Insurance is the simplest and the least expensive insurance policy. The coverage is only for a fixed period of time, usually from one to thirty years. The policy pays to the beneficiary, if the death occurs during the policy term. The premiums are very nominal and it does not build up a cash value.

 

The Permanent Life Insurance is an expensive coverage policy. The four major Permanent insurance types are Whole, Universal, Variable, and Universal Variable Life. All policies of these types give death benefit to the policy holder.

The term Whole Life implies that the policy is taken for the lifetime of a person. The Whole Life Insurance has cash value and provides protection. The premium amount remains constant throughout life. The money invested here earns more interest than they would in commercial banks. The insured also gets tax exemption. This insurance provides dividends and builds cash value to supplement the retirement income.

The Universal Life Insurance is a flexible plan where the death benefit and the premium payment can be adjusted during the policy period. These policies are interest sensitive and the premium can be paid from the interest earned.

The Variable Life Insurance is subject to market risks. When the stocks perform well, these policies yield good returns. The beneficiaries receive the face value of the policy and a part of the cash account.

The Variable Universal Life Insurance is a combination of two types of life insurance policies. They are Universal and Variable Insurance. In this, the sub-account to invest can be selected. The premium can be paid from the cash value. The death benefit decreases and the premium amounts become higher, if the market performance is poor.