Life insurance is basically a contract between an insurer and an insurance holder or an individual, in which the insurer pledges to pay out a designated amount of cash to an insurance holder, typically an insurer’s customer, upon the insured’s death. Depending on the agreement, other unanticipated events like critical illness or terminal illness may also trigger an immediate payout. There are different types of life insurance in the market. These include term, whole life, variable life, and universal life insurance.
Term Life Insurance – This type of life insurance policy is one that offers coverage only for a specific period. For example, during the free look period, the insured may not need to make any premium payments. The insured will therefore be covered even if he dies during this free look period. During the free look period, the insured may decide whether to terminate the policy or continue it. However, if the insured does decide to keep the policy, he has to pay for it during the end of the free look period.
Whole Life Insurance – With this type of life insurance policy, the insured pays a premium for a fixed period of time, irrespective of his health conditions or age at the time of death. The insured pays a certain amount periodically to the insurer. When the insured dies during the whole life policy period, the death benefit automatically stops. The benefit then becomes due to the surviving beneficiaries. However, there are some policies that allow the insured to borrow money equal to the face value of the policy, so long as the premiums are still paid up to date.
Variable Life Insurance – These types of insurance policies allow the insured to choose from a variety of investment options. These investments are usually stocks, bonds, or mutual funds. In certain cases, these policies may also allow the insured to invest in real estate. While the benefits of these policies will be the same as with Whole Life Insurance, they come with added features such as additional investment opportunities. While the benefit may also decrease over time, at least the investments are not tied to the economy. However, many people find that variable life insurance policies are less expensive than some other types of insurance policies, especially when compared to other types that have fixed premiums.
Universal Life Policy – The most basic form of life policy is the Universal Life Policy. This form of policy allows an unlimited amount of cash value to accumulate without limit. The insured can borrow cash value from this policy as well as use it as his/her principal investment. However, the most important advantage of an unlimited cash value is that it will never diminish.Find more about Llama Life here.
Variable Life Insurance – These types of life insurance policies provide the insured with additional options. These include investment opportunities, as well as options to borrow against the death benefits. When an insured dies, his/her beneficiaries will be entitled to receive the death benefit and any additional funds based on their investment performance in the money market or other investment strategy. Most insurance companies also allow the insured to borrow against death benefit as well as use it as additional funds.
The most common type of permanent life insurance is Term Life Insurance. This product is usually purchased with a premium and a term life term is usually for a minimum of ten years. Once the insured pays his/her term life premium, the policy expires and becomes a permanent life insurance policy. When purchasing term life insurance, be sure to take into consideration the fact that the premiums tend to be fairly high.
Another type of permanent life insurance product is the whole life insurance policy. These policies are often sold together as a package, and some companies may offer term life insurance and whole life insurance combined. However, the premiums of the two policies may be very different from each other. In addition to the premiums, there are some points to consider as well. For instance, a whole life insurance company may require you to have a cash-value account, while a term life insurance company may not require one.