Your ultimate insurance guide


The Four Chief Types of Life Insurance

Life insurance, at its core, is a meanssurvivors upon the policyholder's death.
to protect the financial security ofWhole life insurance policies were long
one's survivors. It is generally thought"the norm" in the insurance industry.
of as a way to provide incomeUniversal Life Insurance
replacement for a wage earner'sUniversal Life Insurance is considered a
survivors in the event of death. Lifemore flexible approach to life
insurance is purchased from an insurerinsurance. The required regular premium
by making regular payments of premiumsamount can vary as long as the policy
during the life of the insured. Upon thehas a cash value in excess of the
death of the insured, designatedpolicy's costs. The insured can alter
beneficiaries receive a financialthe policy's future pay out while the
benefit.policy remains in force, making it a
Although all life insurance policiesflexible insurance solution for those
maintain those consistentwho may have more complicated or
characteristics, there are differentrapidly-changing needs than can be
means to achieving the same end. Fouraddressed with term or whole life
distinct types of life insurance havesolutions.
been developed and are in common usage.Variable Universal Life Insurance
Term Life InsuranceVariable Universal Life Insurance takes
Term life insurance is probably the mostthe flexibility of universal life
basic form of life insurance. Termcoverage and adds to it by providing
insurance is purchased for a specificinvestment choices. The policy's cash
period of time (the term). The length ofvalue is not based simply on an interest
the term can vary considerably. Thererate determined by the insurer. Instead,
are term policies that are effective forthe policy's value is based upon the
well over twenty years, whereas someperformance of various investments. The
only involve a one-year term. A regularinsured allocates his premiums among a
premium is paid throughout the term. Ifseries of investment options with a
the insured dies at any point during thevariable universal life insurance
term, the designated beneficiarypolicy.
receives the death benefit. If oneAlthough all insurance policies do share
survives the term, however, there is nocommon characteristics, the four
pay out and the policy simply ends.different types of insurance policies
Whole Life Insurancehave some marked differences. Each type
Whole life insurance has a long historyof insurance policy has advantages and
and maintains great popularity. The costlimitations. For some, a simple term
of premiums is guaranteed for the entirepolicy will more than suffice to meet
time the policy in place. As premiumstheir life insurance needs. Others may
are paid, the insured accumulates a cashbenefit considerably from a more
value for the policy, with the insurerfull-featured insurance policy that
determining the interest rate applied toincludes an investment component and the
that cash value. One may either "cashability to alter the nature of benefits
out" their whole life policy, orand the premium.
maintain it so that benefits are paid to



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