This article concentrates mainly in telling you about the types of life insurance. Check them out. Life insurance comes in numerous forms and note that not all the policies are built equal. You will soon come to know about it with the help of this article. Even if death benefit sums might be same, costs, durations and structure vary extremely among the different life insurance types. Before I tell you about the types of life insurance, there is a frequently asked question, which is how much is life insurance. Well, the answer for this question differs. It entirely depends on the type of plan you pick for being insured. Apart from the scheme you pick, there are certain factors, which are taken into account on how much is life insurance. These include
- Debts you owe
- Your financial income
- Future obligations
Life Insurance Types
1. Whole Life InsuranceThe Whole life insurance offers assured insurance protection for your entire life. These kinds of policies carry “cash value” element, which develops tax deferred in contractually guaranteed sum (generally low rate of interest) unless contract surrenders. With whole life insurance payments, one premium part is literally applied towards an insurance policy portion, whereas another premium part goes towards administrative expenses & premium balance goes towards the investment. The interest rate you accumulate with the help of investment policy portion is 100% tax-free unless you attempt for a withdrawal.
2. Universal Life Insurance
This is another life insurance types, which is also called adjustable or flexible life insurance. It is the variation of none other than the above-mentioned whole life insurance. Similar to whole life insurance, it is also one of the permanent policies offering money value benefits depending on the current rate of interest. The features, which distinguishes this particular life insurance policy from whole life insurance is the cash values, protection level and premiums. Cash value earns a rate of interest, which is regularly set aside periodically by respective insurance company.
3. Variable Life Insurance
Next in the list of different types of life insurance is none other than Variable life insurance. It is exclusively designed for combining savings features & traditional protection of none other than whole life insurance along with investment funds. It comprises of 2 different components:
- General account
- Separate account
General accounts are liability or reserve account of an insurance provider. It is never allocated to individual policy whereas the separate accounts have several investment funds in an insurance company’s collection, like equity funds, money market funds, bond funds, or mixture of these.
4. Variable Universal Life Insurance
Next in the list of different types of life insurance is none other than Variable Universal life insurance. It combines features of variable life with universal life and gives a customer the flexibility to adjust premiums, choice of investments and death benefits. These types of policies are technically categorized like securities. Therefore, these are completely subjected to SEC (Securities & Exchange Commission). Unfortunately, the investment risks lie with policy owner; therefore, death benefits values might either fall or rise. It depends completely policy’s underlying investment success.
Also, in order to choose the right life insurance, refer to this lesson from CNN.