Although you can’t really prevent things from happening, you can take steps to keep protecting your home, family, yourself, and investments. Certain types of insurance, for example, safeguard your home and life’s work in the event of injury, unemployment or untimely passing. In this article, we’ll explore some of the most important types of insurance coverage you should have in place. Here is a detailed summary of the various kinds of life insurance.
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Term Life Insurance
The first and most basic form of life insurance is a term
policy. Term policies are the polar opposite of a whole policy. This policy
doesn’t build up a cash value overtime. Instead, every applicant is given a set
amount of funds and a time limit. The time limit varies with each policy, but
you can get one that lasts up to 30 years. If the company allows it, you can
even extend it an additional five years. And depending on the coverage, the death benefit can
decrease with each passing year. There are two variations of a term policy:
level and decreasing. Decreasing is what we just described. A level policy is
where the value doesn’t change at all throughout the policy’s lifespan.
Whole Life Insurance
Whole, or permanent, life insurance is what most people opt
for when purchasing coverage. This is because its value grows with each payment
you make on it. However, how much the policy grows depends on how much your
premiums are. Not every company offers the same rates, so you’ll need to look
around until you find the right one. Although this is the most common form of
life coverage, there are multiple variations of a whole policy.
Universal
Universal coverage is basically a more flexible whole
policy. It allows a policyholder to change their premiums how they see fit.
Universal is ideal for people who have fluctuating financial situations. If
you’re not able to pay the full amount of your premiums or not at all for a
little while, you can simply call to have them adjusted. You also have to
double-check the insurable interest. For those who don’t know, insurable
interest is what protects you from potential financial losses. In terms of life
insurance, the definition
of insurable interest can have different meanings. You want to have a clear
understanding, so reviewing a guide is in your best interest. There’s plenty of
detailed information that’ll help you understand how it works.
Variable Life
A variable life policy is a unique form of coverage. In
fact, you can consider it a hybrid policy because of how it offers death
benefits and linking it to a savings account. You can also use it to invest in
stocks, bonds and other types of investments. As a result, this policy can
accrue value a lot faster than the traditional whole coverage. However, it also
comes with a lot more risk, so it’s essentially a double-edged sword. You need
to think long and hard before purchasing this. It might also do you some good
to speak with a financial advisor.
Variable-Universal
If you’re looking for an all-in-one package, then variable-universal coverage is all you need. You get to experience the benefits of both a variable and universal policy. However, you also have to deal with the potential investment risks, so be careful. Thankfully, you can adjust the premium payments however you want, which can definitely mitigate the risk factors.
