Term Life Insurance
Though the. Life insurance policies may also vary from company to company, the degree of variance is minimal and none of them will be contradictory to the principles of a life insurance contract. There are two major types of insurance policies term and permanent life insurance policies. These types underlie some more types that make the policies a clutter Some of the parameters for classifying them include number of years, benefits covered, premium amount and other regulations which govern the policy .It is advisable to take a brief look at each policy before taking up it.
Term Life Insurance is a type of insurance policy whereby the insured pays a fixed sum for a period of time. This sum remains constant, and the premium charged is very nominal. The Policy holders normally survive even after its expiry unless they are affected by fatal disease or injured in an accident. This policy does not cost much. Once the policy expires the insured is also at liberty to renew the same but he will have to pay the revised rates of premium. Such a change could sometimes be too high. This is one of the drawbacks of this policy, but it is economical and highly recommended for the salaried youth and middle men. Whole term insurance policy is another classification in term life insurance, in which the insured pays the fixed amount throughout his life.
Group Term Life Insurance
This type of insurance is taken by the employer for his employees. The employer either pays the premiums from his kitty or by deducting the appropriate amount from the salary of individual employees. This policy provides lot of benefits but it cannot be relied solely to meet your insurance needs. This type of insurance is gaining significance in the developing countries.
Level term Life Insurance This type of insurance requires you to select a particular period and pay premiums for the selected period. The policy automatically matures on the attainment of the selected period. say 5, 10 or 15 years which cannot be revoked,. And this type is ideal for those people who are not able to make long term financial plans.
5 Year Level Term Insurance The face amount of this policy remains same for the entire 5 year period and so does the premium. Upon death the face amount is paid lump sum or in the form of an income. This plan is opted for a short term need like covering a bank loan.
10 Year Term Life Insurance This policy also can be used to cover a bank loan like the previous one, but it can do considerably more. It can be used for family protection and a myriad of other needs. The face amount of the policy remains level for the duration and so does the premium. Some companies allow you to continue the policy after 10 years with an increase in premium.
20 Year Term Life Insurance This policy is the most popular one of term life policies, and it is fairly inexpensive. The death benefit remains level for the duration and in some cases so does the premium. The premiums increase after the first 10 years with some companies, to reflect the cost of the additional risk to which the insurance company is exposed as the insured gets older.
Unlike whole life insurance, universal life insurance or variable life insurance, term life insurance does not have cash values or earn dividends. There is a fairly new type of term life insurance policy; however, called a return of premium policy which returns all your premiums at the end of the term period, if you do not die. The premiums are so high it may not be worth your while to buy this type of term policy.
Decreasing Term Life Insurance Decreasing term life insurance is very popular with home owners and mortgage companies. The homeowners want to know that the mortgage is paid off if they should prematurely die, and the mortgage company wants to be assured that they are repaid the money loaned to the homeowner. The face amount of these policies decrease in a uniformed manner each year as the balance owed on the mortgage decreases, and the premium remains level. This is very inexpensive life insurance.
Increasing Premium Term Life Insurance This is initially the cheapest term life insurance you can buy. The death benefit remains level for the duration, however, the premiums increase every year and as a result this may turn out to be the most expensive term life insurance you can buy. If you should purchase this policy it would be wise to convert to a level plan as quickly as possible.
