What are the different kinds of life insurance?

Answer 1

Term life insurance provides protection for a specified amount of time (or term) and pays benefits only if the individual dies during that period. Term policies can be sold in terms of number of years like (1 year, 5 year, or 10 year) or in terms of individual�s age (term to age 50, or term to age 65). There are three basic types of term insurance: Level term insurance- provides a level amount of protections throughout life of the policy Decreasing term insurance- provides protection in which the amount gradually decreases throughout the life of the policy. This coverage is typically sold for individuals that want to protect family members from current liabilities such as a mortgage. As the mortgage is paid off the need for the higher payout upon death is reduced therefore this coverage decreases not only the payout upon death as time goes by but also has lower premiums. Increasing term insurance- As you may have guessed this policy is the opposite of decreasing term insurance. In this form the protection gradually increases over the life of the policy. Generally the idea here is to keep pace with inflation or cost of living expenses.

Briefly, the three major types of life insurance are:

• Level term life insurance where your premiums remain the same during the entire term period

• Annually renewable term life insurance where the premiums increase each year of the term.

• Return of Premiums (ROP) term life insurance where at the end of the term the sum of all premiums paid are returned to you

Term life insurance is the best choice for people who would like to pay low premiums but provide high insurance coverage for their family. Before deciding on the type of term life, you should consider factors like renewability privileges, waiver of premiums factor, etc.

Answer 2

There are two basic types of life insurance available in the U.S.:

Term life

Whole life

Term life provides protection for a specific period of time, and generally is the least expensive type of coverage per year.

Examples of term would be 10yr, 20 yr, and 30 yr level term .

Level term means the annual cost (premium) remains the same for the duration of the contract. Term insurance is most often used to provide inexpensive coverage until life insurance (income replacement) is no longer needed.

Whole life is better known as permanent life insurance. Policies come in various forms such as: traditional whole life, universal whole life, variable whole life and variable universal whole life. Whole life is a bundled product containing life insurance and savings although the consumer risks getting less life insurance money if they take their own money out of their savings. No matter how much money is contained in the savings account in a whole life policy, unless they have paid extra during the life of the policy, the insurance company keeps the entire amount and only pays your benefactor the insurance amount.

Whole life is 8 to 10 times more expensive than term insurance and is relatively non cost effective to the risk of death in the early years of the policy, so that the annual cost can remain level as the insured person ages and their risk of dying increases.

Whole life however, continues until you are 99 years old and increasing premiums are paid in later life partly by the money saved in the savings portion of the policy.