When it comes to purchasing a life insurance
premium, it can be a real challenge to decide what type of policy will suit
your needs. By learning the different attributes of life insurance policies and
by talking to a professional life insurance agent, you can acquire the
knowledge to decide which policy is best for you.
Term Life Insurance
As the name suggests, term life insurance
provides coverage for a certain time interval as mentioned in your policy. This
means that the death benefit will only be provided if you die within that
specified time period. For this reason, term life insurance is much cheaper
than permanent life insurance.
Furthermore, term life insurance comes in two
forms, level term and decreasing term. In the former, you will be paid the same
compensation or benefit irrespective of when you die during the term. Whereas
in the latter, the death benefit decreases and depends on the duration of the
term. Nevertheless, level term policies are more common when it comes to term
life insurance.
Many life insurance policies can be renewed,
which means if the term ends, you have the flexibility to renew your policy.
Although, this renewal may depend on certain factors such as passing a medical
exam, and may also involve an increased premium. Up-to-date reports mention
that an insurer will not renew the policy finishing after 80 years of age.
Permanent Life Insurance
Unlike term life insurance, a permanent Life Insurance Policy
pays the death benefits irrespective of whether you die the day after signing
or 50 years later. Permanent life insurance policies are tempting because of
their capability to grow tax-deferred over a certain time interval. Because of
these benefits, permanent life insurance is more expensive than term life.
Permanent life insurance policies also come with a wide range of options to
choose from.
Permanent life insurance
options are categorized as:
Whole life policies offer both death and savings
account benefits. If you decide to buy a whole life policy, you agree to pay a
certain amount for a fixed death benefit.
Universal life policies offer an additional
flexibility, allowing you to vary the amount that you pay. You may be able to
get a larger death benefit in this way.
Variable life policies include a death benefit
with a savings account that you can invest in bonds, stocks or mutual funds.
