Your ultimate insurance guide


The Four Chief Types of Life Insurance

Life insurance, at its core, is a means topolicy, or maintain it so that benefits are
protect the financial security of one'spaid to survivors upon the policyholder's
survivors. It is generally thought of as adeath. Whole life insurance policies were
way to provide income replacement for a wagelong  "the  norm"  in the insurance industry.
earner's survivors in the event of death.
Life insurance is purchased from an insurerUniversal  Life  Insurance
by making regular payments of premiums during
the life of the insured. Upon the death ofUniversal Life Insurance is considered a more
the insured, designated beneficiaries receiveflexible approach to life insurance. The
a  financial  benefit.required regular premium amount can vary as
long as the policy has a cash value in excess
Although all life insurance policies maintainof the policy's costs. The insured can alter
those consistent characteristics, there arethe policy's future pay out while the policy
different means to achieving the same end.remains in force, making it a flexible
Four distinct types of life insurance haveinsurance solution for those who may have
been  developed  and  are  in  common  usage.more complicated or rapidly-changing needs
than can be addressed with term or whole life
Term  Life  Insurancesolutions.
Term life insurance is probably the mostVariable  Universal  Life  Insurance
basic form of life insurance. Term insurance
is purchased for a specific period of timeVariable Universal Life Insurance takes the
(the term). The length of the term can varyflexibility of universal life coverage and
considerably. There are term policies thatadds to it by providing investment choices.
are effective for well over twenty years,The policy's cash value is not based simply
whereas some only involve a one-year term. Aon an interest rate determined by the
regular premium is paid throughout the term.insurer. Instead, the policy's value is based
If the insured dies at any point during theupon the performance of various investments.
term, the designated beneficiary receives theThe insured allocates his premiums among a
death benefit. If one survives the term,series of investment options with a variable
however, there is no pay out and the policyuniversal  life  insurance  policy.
simply  ends.
Although all insurance policies do share
Whole  Life  Insurancecommon characteristics, the four different
types of insurance policies have some marked
Whole life insurance has a long history anddifferences. Each type of insurance policy
maintains great popularity. The cost ofhas advantages and limitations. For some, a
premiums is guaranteed for the entire timesimple term policy will more than suffice to
the policy in place. As premiums are paid,meet their life insurance needs. Others may
the insured accumulates a cash value for thebenefit considerably from a more
policy, with the insurer determining thefull-featured insurance policy that includes
interest rate applied to that cash value. Onean investment component and the ability to
may either "cash out" their whole lifealter the nature of benefits and the premium.



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