Types of Life Insurance Coverage

During the great recession, most people struggled to pay bills as opposed to building their investments. The recession is now over and there are more jobs available. People are now drawing their attention to retirement plans and savings, including life insurance. Life insurance may not be a priority for young, singe persons who are not earning lots of money as yet. However, for people who have dependents like a child, an aging parent or a spouse, an event such as death could lead to financial difficulties for the dependents. Various types of life insurance coverage are available in the market today:

Term Life Insurance

This is a type of life insurance coverage that is characterized by payment of regular premiums over s specific period of time, known as 'term'. Premiums are paid in exchange of guaranteed benefits in the event that one dies in the course of the term. Such a policy is suitable in most cases for several reasons:

a.    It can be Customized
A quotation is developed based on the term duration, a person's health status as well as amount of insurance coverage one desires. This leaves a leeway to tweak the policy so it fits one's personal circumstances.

b.    It is Comparable
Because of its straightforward conditions, this kind of insurance compares easily across insurance providers. It is not complicated; it only consists of term duration, a premium and a benefit. 

c.    It is Affordable and Focused
Term life is a basic life insurance, nothing more. This creates room to be flexible when it comes to other investment products. One can shop separately to ensure they get the best fit and price as opposed to complex contract that is structured in an ambiguous way and may not necessarily be the best option.

Whole Life Insurance

This is an insurance coverage that guarantees benefits throughout the life of the insured person; it is not pegged to a specific duration. Unlike the term life policy that leaves one with nothing after the term expires, a whole life policy's value grows with time culminating to a death benefit. There are people who opt to cash out whole life policies earlier to get a portion of the entire death benefit when they are in need of money. There are premiums paid for this plan and where the policy is cashed out early, high penalties are charged.

Universal Life Insurance

The universal life insurance policy is structured in such a way that a policy holder pays more than the cost of base insurance so as to accumulate a high interest investment or savings account. This type of insurance coverage is often viewed as a hybrid investment and insurance plan.  However, good returns on the investment component are not always guaranteed.

Rate of Life Insurance Uptake 

It is estimated that at least four in of every ten Americans have no life insurance coverage. More than one third of those who have insurance coverage do not understand the policy's terms well. Life insurance provides a simple way to protect loved ones and is affordable when one goes for a policy that has basic terms. Such a policy is ideal when one is younger and is in perfect health.

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