What Are The Three Basic Kinds Of Life Insurance?

Options are available for people looking for an insurance policy. In your search for answers you may have come across sales people selling the "best" policy. There is no such thing as a "best' policy. Each person should look for what suits them best; and that could be different depending on each situation.

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There are three main types of Life insurance.Term, whole life, and universal. The easiest way to explain these three is by using their names.

Term policies, have coverage for predetermined “Terms”; typically 10,20, and 30 year terms. Premiums also go up in intervals through the whole term.Upon completion of selected term, the policy would “terminate”. If the person covered does not die with in the agreed term, then the death benefit is not paid out.

A whole life policy is also self explanatory. These policies last the whole life. Premiums stay the same for the life of the policy.The death benefit is paid out when the covered passes.Another feature of the whole life policy is the cash value available to “borrow”. This benefit enables the policy holder to get a “loan” from the death benefit. The catch is when the insured passes ,what ever has been borrowed will be subtracted from the pay out.

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A universal policy is relatively complicated, but in short it is a life insurance policy attached to an investment vehicle.Either indexed or Variable, each having slightly different features. Indexed policies are attached to stock market indexes like S&P 500. Variable polices are attached to the stock market but primarily mutual funds. Regardless of how they are connected to the stock market; they perform good when the market is good and bad when the market is struggling.

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