What are the different types of Life Insurance and which is best for you?
First let's look at what types of Life Insurance is available.
The main policies that are offered are Whole Life, Term Life, Universal, Indexed Universal Life and Return of Premium. The type of policy that is best or you depends on your needs and budget, I will briefly go over some of the characteristics of each.
Whole Life: This is one of the first types of life insurance to be sold. It is a policy where you pay the insurance company a premium that will stay the same unless the face amount is changed. The insurance company will use a percentage of the premium to cover the liability of the policy, the rest they will place in guaranteed investments and a portion will be used for cash value that increases during the policy and is available for the policy holder for loans or a buyout of the policy.
Term Life: A Term Life policy is a life insurance policy that last for a certain term, such as 5, 10,15 or high as 30 years. This is the lease expensive type of policy and is used by people who want to get inexpensive coverage while they need it most. The policy payment will stay the same throughout the term period, but increases dramatically after the term. In some cases the policy will expire after the term.
Universal or Indexed Universal Life: This is also a policy that will last all or most of the insureds life. It is similar to Whole Life, except that the policy payments are more flexible,