What Do Different Types Of Life Insurance Include

There are many types of life insurance policies and coverage, and each type has advantages and drawbacks. Understanding what each specific type includes, and the pros and cons of each, will allow you to make better decisions when it comes to choosing your life insurance type and policy. Term life is one of the many different types of life insurance, and this is the simplest policy you will find. You pay your premiums, and you are covered by the amount you have chosen during the term you have selected. This policy type is usually the least costly of all your options, but it is not considered permanent insurance because your coverage only lasts as long as the term. If you do not pass away during the term period, your coverage ends, and your premium payments are not refunded. There is no cash value or investment component involved, and the benefit is a lump sum payment in the amount of the policy death benefit upon your death.

Whole life insurance is one of the permanent types of life insurance, and this option also builds up a cash value. Whole life usually offers a premium that stays the same for life, and the life insurance company will manage the cash value account of your policy. This type of policy has a death benefit, just like term life, but you also have a cash value component which acts as a savings account. This portion has tax advantages as long as the account funds are not withdrawn, and the balance can accumulate to a sizable amount over time. Whole life is not known for flexibility though, like some other types of life insurance. Variable life insurance is another type that you should be aware of. Variable life is permanent coverage intended to be kept your entire life, and it is targeted towards those who want higher flexibility and are willing to take higher risks as well. With this type the death benefit that you leave will vary, depending on the investment performance as well as the cash value.

One of the other types of life insurance is universal life insurance, which is also permanent protection for life as long as the premiums are paid. The flexibility of universal life is greater than most other types, and you can earn interest on the cash value of the account. You will be able to borrow against the policy, just like you can with whole or variable life, and the risks involved are not as great as they can be with some other permanent life choices. Out of all the different types of life insurance, the most flexible is universal variable life. This type allows you to control almost every aspect of your cash value and investment account associated with the policy. You decide where your money is invested, instead of the life insurance company making these decisions. This gives you more control and flexibility, while still providing a death benefit for your loved ones to protect them financially.