 Types
of Insurance
There are different types of life insurance policies
available. Shop around and compare policies to ensure that you
receive the best deal possible. This sounds obvious, however,
there are dozens of different types of life cover plans
available and it is important that you select the right one
for your circumstances.
Life Insurance is insurance that provides protection
against the economic loss caused by the death of the person
insured. There are several types of Life Insurance, each
having different characteristics. Some of the key types of
Life Insurance are: Term Life, Whole Life, Burial Insurance,
Survivorship Life, Universal Life, and Variable Life
Insurance. Outlined below is a useful description of each
type:
Term Life Insurance
Term Life Insurance is the lowest cost and simplest product
available. Term insurance is a life insurance contract that
provides protection for a limited number of years. The death
benefit is only payable if death occurs during the agreed-upon
term. There are various types of Term Insurance Life Policies:
Level Term Life Insurance
Means that your premiums are set at a level at the
beginning of the contract and do not move up or down. The sum
assured will remain the same throughout the term.
Increasing term insurance
This is a fixed term policy where the sum assured will
increase, either by a set percentage or by the Retail price
index (RPI) throughout the policy term. Your premiums remain
level throughout the term if the sum assured rises by a set
percentage, or will rise according to the RPI if the sum
assured does the same.
Renewable term insurance
This is policy lasting for a smaller period, usually five
years, which can be renewed, although the sum assured cannot
be increased, whilst the premiums will increase with age.
Renewable increasable term insurance is the same as above but
provides for an increasing sum assured.
Convertible term insurance
Provides the option to convert parts of the sum assured to
whole of life, endowment or further term assurance without
further medical evidence.
Decreasing term insurance
Is where the sum assured decreases over time; hence, the
premiums are set lower. This is commonly used to cover a
mortgage.
Whole Life Insurance
Life insurance that remains in force during the insured's
entire lifetime, provided premiums are paid as specified in
the policy. Whole life insurance also builds a savings element
(called the cash value) as a result of the level premium
approach to funding the death benefit.
Burial Insurance
Burial Insurance, or Final Expense Life Insurance, is
essentially a whole life product with small face values. The
application process is simple and does not have the associated
medical requirements of other policy types. This type of life
insurance is also referred to as a simplified issue or
guaranteed issue policy.
Survivorship Life Insurance
A type of whole life insurance which insures two people and
pays benefits only after the second person dies. It is
generally designed to provide funds to pay estate taxes.
Universal Life Insurance
An unbundled whole life insurance product in which the
mortality, investment, and expense factors used to calculate
premium rates and cash values are expressed separately in the
policy. In a universal life insurance policy, any applicable
expense charges are deducted from the premium and the
remainder of the premium is then credited to the policy's cash
value. Each month the insurer deducts the mortality costs from
the cash value and credits the remainder of the cash value
with interest.
Variable Life Insurance
A form of whole life insurance under which the death
benefit and the cash value of the policy fluctuate according
to the investment performance of a separate account fund. Most
variable life insurance policies guarantee that the death
benefit will not fall below a specified minimum. A minimum
cash value is seldom guaranteed.
by
John Mussi
About The Author
John Mussi is the founder of Direct Online Loans who help UK
homeowners find the best available loans via the http://www.directonlineloans.co.uk
website.
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