There are two major categories of life insurance. Term life cover and permanent life cover. As the name implies term life insurance will cover you for a specific period of time where as the other being permanent life cover does not expire in time. The only time it will expire is when the insured individual passes away and the beneficiary is paid out. There are many different types of permanent life cover policies. Lets see what they are all about and what they can offer you.
A combination of a term policy and a savings plan all in one is what a Universal life cover will offer you and your family. The amount of f funds that you apply to be part of the savings portion is a flexible one. It is not required to be a set amount. Universal life insurance policies are also designed to pay a designated beneficiary a lump sum also known as the death benefit upon the death of the insured individual. If you find yourself torn between term life and whole life then universal life cover is the option for you. As Universal life cover policies are hybrids of the two.
The next type of Permanent Life Insurance is known as Variable Universal Life Insurance. It is a mouth full. Very much like universal life insurance it divides your premium into two portions. One being the savings and the other being the insurance part of it. But the difference here is that you have the option of using investing the savings in investments you would find suitable. You can choose low risk investment options which offer lower returns but more security, or you can choose high risk high return investment options. The death benefit for this policy type will vary, but is guaranteed to be a specific minimum amount.
Whole Life Insurance has been in existence for as long as the concept of insurance has been around. With whole life cover policies you pay towards a death benefit only. The insurer guarantees to insurer the client as long as monthly payments are maintained and this will not expire. Upon death of the insured the beneficiary will receive full payment. Whole life insurance come with many benefits added to the cover. It is up to you to find a provider that will offer you the most appetizing benefits. The price tag on whole life insurance policies are significantly higher than that of any other permanent life option.
“Buying term is like renting your insurance, You don’t build up any residual value. Whole life is like owning a home – you build up equity.” says Scott Berlin, senior vice president in charge of the Individual Life Department at New York Life Insurance Co.
All permanent insurance policies have cash values and most earn dividends is the company performs well with it’s investments. But it is up to you to collect all needed information in order to make a well educated decision.