The Major Types of Life Insurance

There are an inexhaustible number of options available to the consumer today. Of all the many thousands of policies that you can potentially buy, there are principally only two types of policy: whole (permanent) and term life insurance.

Anyone considering buying a policy ought to know the difference between the two in order to make an educated decision as to what plan suits them best. Even if you are already in a plan, but it’s nearly up for renewal, or if you need additional coverage, it’s a good idea to reassess the market and see what’s available.

Term Life Insurance Policies

This is by far the most popular plan with the public. Term policies are more basic than permanent plans and, as the name suggests, it covers policyholders for a pre-specified term, usually of between five and thirty years. There are two main categories of these plans: level term and decreasing term.

Level term policies maintain the same amount of death benefit throughout the term of the plan, whereas decreasing term policies have a decreasing amount of death benefit as the term progresses.

Decreasing policies are bought by those who think that their insurance requirements will lessen with time. Once the kids have been through college and the home mortgage has been repaid, along with any personal loans or acquired debts, one’s financial responsibilities are fewer and therefore less coverage is required.

Either of these options provides a cost effective alternative to whole life plans that are both affordable and flexible.

Whole Life Insurance Plans

Often referred to as permanent life insurance, this type of plan has three sub-categories: traditional, variable and universal insurance. Traditional whole life has an interest rate with a guaranteed minimum amount, which accumulates with the value of your plan.

Variable whole life gives policyholders a choice of variable premiums, death benefit and investments. Universal whole life comes with an investment product which you can borrow against which is tax deferred and usually kept in a dedicated savings account.

Securing yourself financially is always a wise choice, particularly if you have any dependents who you wish to provide for in the future. In order to make sure that they will get the most out of your plan, it’s a good idea to talk to an agent before buying. Do some online research from a reputable quoting site, and use the quote engine (such as the one at the top of this page) to get a good idea of the type of plan and the rate that you can expect to pay.