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What are the different variations available in a life insurance policy?

Monday, February 13th, 2012

There are many interesting variations available when you want to purchase a life insurance policy that suits your needs and requirements. In other words, you can pick a life insurance that is absolutely tailor made for your needs. To start with you have to understand that a term life insurance offers coverage only for a stipulated time period, whether that is 10, 15 or even 25 years. Once this time frame is over, you will not receive any benefits from the insurance provider. In other words, you have paid a premium all these years without really getting anything in return. People choose term life when they have a liability and are the sole earning member of the family. So, taking term life for the period the liability is likely to exist is the general strategy. Besides, term life is cheaper. So, whether you are worried about a house mortgage, a 20 year loan repayment period or the education costs of your children, term life will provide the answers.

The idea of term life insurance is resisted by some people who are ready to pay higher premiums so that they get something in return at any stage of their life. This is where permanent life insurance comes to the picture, where there is assured coverage and death benefits for the beneficiary of the policy holder. Whole life insurance is a variation of permanent life insurance. The premium for such insurance might be constant over the entire time frame of the policy. It could also increase keeping in mind the inflation and growing risk with the policy holder. Once again, the earlier you purchase a life insurance policy, the better it is for you as the premiums tend to be lower. Policies can differ based on how the premiums or the assured death benefits or both change over the years.

There are plenty of other choices like universal and variable universal life insurance policies. These policies open a lot of new options for those who would like their premiums to yield something for them. The investment component in these policies accumulates certain cash value which is handed over to the policy holder at the time of maturity. In some policies, the investment component and the premium paid for death benefits can be tinkered with, if the policy holder wants different amounts. The policy holder can even determine where the cash value has to be invested for better yields.

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