If you are looking around for a suitable life insurance policy that you can sign up for, this article will give you a good start by giving a broad idea of what each insurance policy type has to offer. There are two general categories of life insurance; they are term life and permanent life insurance policies.
Term life insurance policies - These are usually medium term insurance policies that will provide a temporary safety umbrella for those who need insurance only up to a certain point of their life. For example, a newly married father might avail a term insurance policy for about 20 years. In the event of his untimely death, this will help his wife cover expenses until the children are old enough to earn a living on their own. Term policies are usually sold for periods of 10 years, 15 years or 20 years although there are other time periods available as well. There are even term policies for just one year although they are not very popular.
With term life policies, the insured person does not stand to gain anything if he is alive at the end of the term period. All the premiums that he or she might have paid will not be returned. This is one of the reasons why premium payments are lower with term life policies. If however a person wants some of the premiums returned, they will need to avail a permanent life insurance policy that will typically cost more in premiums.
Permanent insurance - Permanent life insurance or whole life polices as they are often called will cover you for the entire period of your life as long as you make timely premium payments. It will also accumulate a cash reserve as time goes along. There are many different types of permanent life insurance policies that will allow you to withdraw or use the cash reserve in many ways. For example, there is a universal policy where the interest that accumulates on the cash reserve can be used to pay off the premiums. In a variable policy, it can also be used to invest in selective financial instruments as offered by an insurance company.
Life insurance is often thought of as merely a means to replace lost income from a person should they pass on. While this is certainly the central purpose, there are other variations as well. Using these policies to invest is a definite possibility. The key is to figure out what you need and then find the policy that provides the solution to that need.
Term life insurance policies - These are usually medium term insurance policies that will provide a temporary safety umbrella for those who need insurance only up to a certain point of their life. For example, a newly married father might avail a term insurance policy for about 20 years. In the event of his untimely death, this will help his wife cover expenses until the children are old enough to earn a living on their own. Term policies are usually sold for periods of 10 years, 15 years or 20 years although there are other time periods available as well. There are even term policies for just one year although they are not very popular.
With term life policies, the insured person does not stand to gain anything if he is alive at the end of the term period. All the premiums that he or she might have paid will not be returned. This is one of the reasons why premium payments are lower with term life policies. If however a person wants some of the premiums returned, they will need to avail a permanent life insurance policy that will typically cost more in premiums.
Permanent insurance - Permanent life insurance or whole life polices as they are often called will cover you for the entire period of your life as long as you make timely premium payments. It will also accumulate a cash reserve as time goes along. There are many different types of permanent life insurance policies that will allow you to withdraw or use the cash reserve in many ways. For example, there is a universal policy where the interest that accumulates on the cash reserve can be used to pay off the premiums. In a variable policy, it can also be used to invest in selective financial instruments as offered by an insurance company.
Life insurance is often thought of as merely a means to replace lost income from a person should they pass on. While this is certainly the central purpose, there are other variations as well. Using these policies to invest is a definite possibility. The key is to figure out what you need and then find the policy that provides the solution to that need.
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