The 5 main Types of Life Insurance
There are many different types of life insurance plans available out there, and not everybody needs the same one. Families are different and circumstances are different, therefore their types of life insurance will most likely be as well. Most people buy life insurance to replace income that would be lost at the death of a wage earner, it is a basic financial protection plan for your family.
Life insurance is an important component of a sound financial plan, so when buying insurance make sure you are asking a variety of personal lifestyle and financial questions. There are hundreds of life insurance companies to choose from so there are many different types of life insurance as well.
The 5 main Types of Life Insurance are:
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Term – is appropriate and more cost effective for temporary needs which may be a period of one to thirty years.
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Variable – provides permanent protection and requires scheduled premium payments, but offers a wide range of investment choices.
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Whole – is what you buy to cover you for your entire life. Also known as “Permanent”.
- Universal – is a permanent insurance that provides protection in case of death, as well as a savings or cash value component.
- Endowment – is a savings scheme contract designed to pay a lump sum after a specified term of maturity or on in case of an early death.
There are many different types of life insurance policies on the market each with its own specific features and benefits. Life insurance is not a “one size fits all” proposition, it is a contract between an insurance company (the insurer) and you the insured. In its most basic form, a life insurance contract is a promise by the insurer to pay a sum of money to a person you choose as your “beneficiary” upon your untimely death.
Some types of life insurance can also be used as a source of retirement income, funding for a child’s education, or as a source of cash in an emergency. Also it is not limited to family men and women alone as business partners can too. If you want to see to it that your business stays afloat even after your death, you can take out a life insurance policy.
