When we talk about life insurance types, it can be broadly classified into two basic categories – term life insurance and whole life insurance. As the name suggests, term life insurance offers coverage only for a stipulated period of time. After the term comes to an end, the policyholder may choose to either renew the policy or allow the coverage to terminate.
Although there are quite a few types of life insurance policies that are available in the market, two basic types are the straight life insurance and the one-year renewable term. These are two of the most popular insurance policies that most people prefer to purchase.
- Life insurance types include:
- Whole life insurance
- Term life insurance
- Universal life insurance
- Senior life insurance
- Children’s life insurance
- Mortgage protection life insurance
Whole life insurance will offer coverage to the policyholder for their entire lifetime. After the death of the policyholder the death benefits are paid to the beneficiaries named in the policy. The premium remains constant as the cost of the policy is spread over a period of many years. Hence, older people tend to benefit as they are on fixed incomes and don’t have to deal with rising premium costs.
Term life insurance offers coverage only for a specific period of time such as 1, 5, 10, 15, or even 20 years. Hence, it is also known as temporary insurance as it offers coverage only for that time period. If the person expires within the term of the policy, death benefits will go directly to the beneficiary. The coverage will cease if the term is over and if the policy has not been renewed. If the policyholder expires after the end of term of the policy, then no cash benefits would be awarded to the beneficiaries.
Universal life insurance offers greater flexibility and has a lot of features similar to whole life insurance. It is a permanent policy and offers protection to the policyholder until the time of his/her death. It also accrues cash value over a period of time.
Senior life insurance is a coverage offered to senior citizens in most states. Despite the fact that most seniors have insurance, the death benefit is often very small to cover medical costs and funeral bills.
Children’s life insurance helps give children a financial foundation through which they can benefit once they get older. Hence, grandparents and parents always like to opt for insurance in order to secure the future of their little ones. It helps in keeping them happy and healthy while also providing for a brighter future. Rates are likely to go up with age and hence it is a wise decision to invest in the child’s future while they are still young.
Mortgage protection life insurance is a boon for the policyholder’s family. In the event of the death of the insurer the family will not risk losing their home. If the head of the family dies before the mortgage is paid off, the family can become homeless. Hence, mortgage protection life insurance is a very wise option especially if there are a lot of dependents.
