A life insurance policy is a policy that lets the loved ones of the policyholder be compensated after the policyholder’s death. When this policy has been issued, it can’t be canceled if there is a change in the policyholder’s health status. There are several types of life insurance policies that every consumer can go through and choose what works best for them. If you have any questions, you can always consult a life insurance attorney. These policies are categorized under the two main life insurance policies:
Term Life Insurance:
Term life insurance policies are meant to last for a specific period of time. The most common term life policies are written for one to twenty years. Its expiration or lasting time can also be specified to the policyholder’s age. If the policyholder dies in the specified term or age of the policy, the insurance company will pay the death benefit to the beneficiary. This is why this policy is a good choice for people who are looking to get protection temporarily or for a specific need. Although this insurance is rendered useless if the policyholder dies after the specified term, it’s still viable.
The term life insurance policy is also a more affordable alternative, which is why most people opt to get it. Here are a few variations of the term life insurance policy:
- Level Term Insurance: This is a more consistent and wise variation of the term life insurance policy. It can last for 10, 20, even 30 years. The death benefit amount and other things that the beneficiary will be getting are constant and level during the specified time of this policy. Even if the policyholder’s health status is messed with, the benefits will remain consistent.
- Decreasing Term Insurance: This insurance covers financial obligations that can decrease over time, like a mortgage. A decreasing term insurance policy has a decreasing death benefit, which is a good temporary fix.
Whole Life Insurance
The whole life insurance policy gives a fixed amount of coverage for the person holding the policy. These insurance coverages are turned into death benefits which are only payable after the policyholder’s death. These policies are widely used because they have a cash value policy that postpones the intervention of taxes. Cash value is an account that’s opened in the policyholder’s name. This account collects all the premiums made by the policyholder throughout their life and can be used as a normal bank account. The money in the cash value account can be borrowed as a loan and deposited back even during the policyholder’s life.
Check out this to learn more about the many different kinds of whole life insurance policies:
- Nonparticipating Whole Life Insurance Policy: The dividends of a policyholder of the non-participating whole life insurance policy can’t get paid. The policy owner sets the value of the benefits when they purchase the policy. They remain fixed from that time till the death of the policyholder.
Ordinary Level Premium Whole Life Insurance: In this policy, the premium payments remain constant until the policyholder’s death. The cash value on the other hand equals the face amount of the policy.
