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Life Insurance Facts What really makes life insurance quite interesting and hard to grasp for new customers are the details. So to make things a bit clearer to you here are some basic facts you have to know about life insurance read more...

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Choosing the right life insurance types Choosing the right life insurance types


Choosing the right life insurance types

When you have decided to get life insurance, it's very important to know which type of life insurance is right for you. If you have spoken to an insurance agent or took your time to learn more about life insurance, you probably know that there are different types of life insurance policies, each serving its purpose and having a set of pros and cons to help you get the best service to suit your personal needs. If you do not know about the difference between these policy types, we highly recommend learning it right now, since it can make a big difference which type of life insurance you're purchasing both in terms of money spent and coverage obtained. So here is a short description of three main types of life insurance you can get these days:

Term life insurance

Term life insurance is the simplest and least expensive form of life insurance available on the market. A term policy has a special period (term) during which the coverage is available. As soon as the term expires, the policy doesn't provide coverage anymore. So if the policyholder dies during the effective term, his family will receive the specified benefits, and if he's alive during the whole duration of the policy, they get nothing. Simple as that. Term policies have various effective periods ranging from one to thirty years. Some policies allow prolonging the term one it expires, while other give you an option of converting them into whole life insurance policies.

Whole life insurance

As you may guess it from the name, whole life insurance policies are designed to provide coverage throughout the entire life of the policyholder. Moreover, whole life policies have additional money accumulation options, which allow using the benefits of the policy as investment tools or loan collaterals. Of course, with such features, whole life insurance policies are much costlier than term policies, but you get what you pay for. This type of life insurance will certainly appeal to those who have long-term plans for them and their families and want to gain increased stability and additional investment options for the money they pay.

Universal life insurance

Universal life insurance is somewhat in between whole and term life insurance, taking the benefits of both types. To put it simple, it is a term life insurance policy combined with a special tax deferred savings account that allows accumulating additional funds while the policy is in force. It is quite a useful form of life insurance for those who want to gain additional savings by the time they have to retire and sometimes universal policies can actually be a good alternative to retirement funds. The rates with universal policies are somewhat in between whole life and term policies, and you will have to keep this policy for a long time in order to accumulate considerable savings though it.