Due to the different types of life insurance on the market, looking for life insurance types could seem overwhelming. Here are some of our most frequently common questions about the different life insurance types out there:
How many different types of life insurance exist?
There are typically two main types of life insurance. They are called term life insurance and permanent life insurance. There may be multiple variations of these two basic forms.
How does term life insurance work?
Term life insurance helps to give you and your beneficiaries financial protection for a specifically scheduled time period.
Are there variations for different life insurance types when it comes to term life insurance?
There generally will be, as policies may be offered for different terms and different riders could be added. There is what is known as an annually renewable term life insurance policy, where you may be able to decide whether to renew the policy each year. However, since the insurance premiums could go up each year as you get older, you could want to get a guaranteed level term life insurance policy, which may lock in a set rate.
Return of premium term life insurance is another type of life insurance. If you happen to be alive when the term ends, you will typically get back money from what you paid for the insurance premium.
Are there other different types of life insurance that could work for me?
First, there is permanent life insurance. It covers people for their whole life, not just a defined term or time period. But the premiums for permanent life insurance may typically be more expensive. There are a few subcategories when it comes to permanent life insurance. The most well-known subcategory is known as whole or universal life insurance, which generally is more expensive than a term life policy.
The way universal or whole life coverage also works is that it has an investment component, as well as life insurance. And with variable life insurance, you can usually decide how the money may be invested.
Benefits of Universal Life Insurance