Different Types of Life Insurance
There are two types of life insurance or two basic categories, permanent and temporary. Beneath the two basic categories are a number of sub categories. With temporary life insurance you can buy a policy that lasts from anywhere from 1 year to 5 years. Permanent life insurance lasts for the rest of your life.
Term Life Insurance:
With term life insurance you will specify the amount of time you want coverage. Should the person pass away during that term your beneficiaries will receive a payout. If the beneficiary does not pass away during that term they can renew it at the end of the term assuming you are still insurable. Should you contract a terminal disease before your renewal, you will not be able to get life insurance.
Permanent Life Insurance:
• Whole Life Insurance – Whole life insurance is a policy that is for the “whole” of your life. It contains a cash value that can be cashed in should you have need of it but, you would incur fees.
• Universal Insurance – Again this policy is for the entire lifespan of the insurer. The payout is flexible with a potential higher payout.
• Limited pay – This option is simple and very appealing to those who want to be rid of ever raising premiums. You pay on you policy for a specified period of time and then, you stop paying and viola, you have life insurance for the rest of your life.
The list for permanent life insurance can go on and on, especially if you are looking at multiple insurance companies. Every insurance company has their own version of different types of life insurance. The important things to consider remain the same regardless where you choose to get insured.
One of the most important decisions to make first would be if you prefer term or whole life insurance. When considering these options, you need to think about 2 things, one, your financial ability and two, family history.
Your financial ability to pay your premiums must be solid and sound, should you let the policy lapse you run the risk of your beneficiaries not receiving a payout if you die. You also run the risk of losing the money you already invested, be it a contractual reason or a federal reason. You will also more likely than not, pay more for whole life insurance than term life insurance.
The reason you might want to look at family history is that if your history includes diseases like cancer and other terminal diseases, term life insurance could be a dangerous road to travel. With whole life insurance you are guaranteed to be insured so long as you bought the policy before your terminal illness was diagnosed.
Doing your homework and knowing your options are absolutely essential when it comes to life insurance. Research can be the heaviest gun in your artillery. Research the different types of insurance, your family history, the insurance company and whatever else you can think of because it is very likely that once you make your decision you are going to have to stick with it. Diligence in this case is a virtue!