When we talk of life insurance types there are basically two categories such as the term life insurance and whole life insurance.
In term life policies there is a set duration that limits the period of coverage. Then the onus is on the term life policyholder to take a decision if the policy needs to be renewed or it should simply be allowed to terminate.
There are many life insurance types that are available but the most important ones are the one-year renewable term as well as the straight life insurance. These two types can take care of the insurance needs of most people.
The term life insurance types include:
- Universal Term Life Insurance: This is a new type of cash value policy. It has more flexibility and transparency compared to other policies.
- One Year Renewable Term Life Insurance Policy: The death benefit on this policy remains the same during the entire duration of one year and it also after the policy is renewed. But the premium will increase after every renewal and will continue to go up with the age of the policyholder.
- Adjustable Term Life Insurance: This is also a new type of cash value policy and is a bit flexible but there is no transparency.
- Decreasing Term Life Insurance: Here there is a declining death benefit which will ultimately reach zero by the end of term. Premiums remain the same during the term but may sometimes be paid before the end of term.
- Level Term Life Insurance: Here, there is no change in death benefit during the life of the insurance cover.
- Increasing Term Life Insurance: This coverage could either be added as a rider or it may be part of the policy itself.
- Variable Life Insurance: This refers to the variable amount in the cash value of these policies. These are tied to investments and the cash value changes depending on how well the investment does.
- Industrial Life Insurance: This is an insurance plan which pays the death benefit of around $1,000 or less.
- Front-End Loaded Term Life Insurance: There is a high cash value on these policies during the first few years due to the admin costs that are involved while issuing new term life insurance coverage.
- Flexible Premium Variable Life Insurance: This has both features of universal life insurance and variable policies. Premiums and death benefits are variable but there is a minimum guarantee on death benefit.
Whole Life Insurance typesare very different from term life insurance policies as the duration of the term can extend to 100 or whole life. There are different types of whole life insurance typessuch as:
- Limited Payment Life Insurance: The death benefit here remains the same through the coverage period and policy can extend until insured reaches 100 years of age.
- Straight Life Insurance: Premiums remain the same every year and for the duration of the term.
- Modified Life Insurance: Here the premiums may be modified after three years or five years but premiums will remain the same for 3 years or 5 years and change after that.
