Life Insurance is useful for many people. This insurance provides a certain income to your dependents, for example your spouse, children, parents or any other person if the insurer will die. If you’ve decided to take life insurance you come across different types and it is important to check all the pros and cons before you take your final decision. There is a wide variety of life insurances and selecting the right one may require some time but it is important that the one you take fits your needs.
Here are the major types of life insurance which may vary from company to company and there are also differences between the countries worldwide:
*Term life insurance
This insurance is the simplest type of life insurance and the beneficiary of the policy will receive a death benefit if you die within the coverage period. These policies are available for periods from 1 year to 30 years or even more. These policies can be renewed if the term of your policy expires. They don’t need more health checks if you renew your policy but your premium will increase because there is more chance to die if you become older. These insurances provide only a death benefit. That is the main reason why this insurance is the cheapest one. Other life insurances provide also a cash value account.
*Whole life insurance
This life insurance provides coverage for your entire life and will provide the beneficiary of the policy a death benefit and a low risk cash value account. The premiums are higher than these of term life insurances but don’t increase. These premiums are higher than the real costs of insurance coverage but this extra money will be used to increase the cash value account. You will also receive dividends during your lifetime and you can eventually deduct this money from your payments. This life insurance doesn’t allow choosing how your cash value account is invested.
*Universal life insurance
This life insurance has some similarities with whole life insurance and provides the beneficiary of this policy a death benefit and a low risk value account. The difference with this life insurance is that you have more flexibility in making your premium payments. Universal life insurances give you the freedom to choose how much and when you want to pay your premiums.
The height of your premiums will have an impact on the growth of the cash value account and in many cases also the death benefit. It is important to know that if you want to raise the amount of coverage, you need to pass the total process, including the health checks. This will also result in higher premiums. This life insurance doesn’t allow you either to choose how your cash value account is invested.
*Variable life insurance
This life insurance provides permanent coverage and the beneficiary of this policy will receive a death benefit and a cash value account. This policy allows choosing how your cash value account will be invested. It is possible to choose between several investment options which can be a fixed rate but also investment options with a high risk.
You need to pay a fixed annual premium for your entire life and this type of life insurance will provide a minimum guaranteed death benefit. The amount of the cash value account is dependent on the risk profile you have chosen and you have no security of the amount in this account.
A life insurance provides an income for your dependents and can help them with the extra expenses and loss of income. Your spouse, your children or other people who are dependent on your income need to live further without you and you can help them to live comfortable through buying the right life insurance. If you are single and you don’t have dependents, a life insurance is waste of money because you don’t have anybody who is dependent on you. Unfortunately most people realize the importance of life insurance when it is too late.
Choosing the right life insurance is an important decision. It is important to check all the advantages and disadvantages, the expenses and you’ll find one which fits your needs. Maybe a term life insurance will be good for most people; there are situations which may decide to choose for other types of life insurances, especially if you don’t have a special retirement plan for your savings.