Types of Life Insurance
There exist two main categories of life insurance policies. We will now disclose both, in detail, and hand over to you the power to make sound decisions for yourself, as well as illustrating what clientele they are specifically suited to.
Term Life Insurance
Is one that has a time constraint to it – basically, a specified time period during which the contract is plausible, in consequence of which it reaches expiration. Typically, a time period of 10, 20, 30 years, which is generally settled by both parties upon reaching an agreement. The time period is directly proportionate to the number of monthly premiums paid, hence, the shorter the time period, the lesser the monthly premiums.
The downside to this method, is how life pans out for the consumer. If the insured party lives beyond the allotted time window, the contract will terminate itself. There would be no payment of a death benefit on part of the company, and the client would have lost the premiums paid.
Both parties are fully aware of this condition upon agreement.
Suitable For: People with several financially dependent loved ones. Someone with a stable medical backlog, and is opting for this policy as a worst case scenario.
Not suitable for: People suffering from serious medical problems. Involves generally young or middle – aged people.
Whole Life Insurance Policy
As evident by the name of the policy, whole life insurance policy withstands a person’s entire life span. The insured party discloses to the company, his beneficiaries, and keeps on paying the premium his entire lifetime. It is just like an investment.
In case of death, in accordance with his specific insurance policy, the death benefit is cashed out to the dependents. It is the most common type of policy that goes around.
It is highly feasible and beneficial to those who are thinking long term, and want to secure the future of their loved ones, upon death. However, death itself does not seem pre imminent.
Suitable For: Clients ranging between the ages of 45 – 85, holding large families.