A lot of individuals have considered getting life insurance policies. However, what has always confused individuals is the types of life insurance they should get. We have briefly outlined the types of life insurance policies available on the market. Below listed are some of the more common insurance policies.
Types of Life Insurance Policies To Choose From
- Term Life: This type of life insurance policy usually ranges from about 1 to 30 years. If during the term of the life insurance policy you, the policyholder should die, the beneficiaries nominated by the policyholder get the entire amount of the policy. If however the policyholder should live beyond the term of the insurance policy, the beneficiaries do not get anything. With these types of life insurance policies you so have the option of renewing the term of your life insurance policy but it is usually at a higher rate.
- Whole Life: This type of life insurance policy is unlike a term life policy. Under this policy you are covered for the entirety of your life. In addition to this what you might also be interested in knowing is that the premiums on the policy, is a bit more that than the actual premiums required to cover the policy. The extra amount goes towards a cash holding account, the amount of which you can decide on how to invest. Usually these accounts out grow their limits owing to the dividends being received by the investments made. If you live past the insurance term the amount equal to the death benefit of your policy is paid upon maturity.
- Universal Life Openness: With this type of life insurance policy you do not get to choose where the cash account is invested. However this policy gives you a lot of flexibility as far as your premium payments are concerned. The policy will stipulate the maximum and minimum amounts that need to be paid, however when and how much is going to be paid is left up to the discretion of the insured. It must also be remembered that while this extremely similar to a whole life policy. The investment decision does not vest with the insured. In addition to this, should you wish to make any amendments to your insurance policy, like increasing the level of cover etc. you will be required to go through the insurance underwriting process again. This may also include an additional medical examination.
- Variable Universal Life: This is a truly hybrid account. This type of life insurance combines all the benefits of a universal life and flexible account. The consumer has the option to decide where and into which investment subaccount the funds will be deposited. The customer also has the discretion of determining the amount of premiums to be paid and when they are going to be paid, as long as they remain within the guidelines of the policy. In addition to this consumers can also get themselves a guaranteed death benefit and also make taxable withdrawals from their cash accounts. It may of interest to know that most of these policies offer a guaranteed benefit irrespective of how your investments have performed.
These are some of the life insurance policies available on the market today. Consumers should consider their personal circumstances and needs and their risk tolerance prior to making a selection with regard to their life insurance policy or provider.
References:
- Types of Life Insurance Policies – 360 Degrees of Financial Literacy