In order to protect one’s family, life insurance is highly recommended. There are different types of life insurance. Some types work better for some family’s needs than others. Knowing the differences is important to get the right coverage.
One kind of life insurance is term life insurance. This kind of life insurance policy lasts for a shorter period of time than other kinds of life insurance. With this kind of policy, the benefit amount will only be paid in the event of the death of the insured. If at the end of the term stated in this life insurance policy the insured survives, the policy is no longer in effect and cannot be carried over. The insured is not assigned a penalty for not renewing the policy. However, the insured may opt to take out a new life insurance policy. With term life insurance, the amount of the insurance premium will increase. This increase is due to the greater risk of illness and death for the insured. Usually, this sort of life insurance policy is tax free.
A second kind of life insurance is permanent life insurance. Unlike term life insurance, this kind of life insurance policy lasts for the duration of the insured’s life. This kind of policy also may build a cash value with it. Permanent life insurance premiums remain constant but generally cost more than term life insurance premiums. For permanent life insurance to remain in force, premium payments must be paid. If a payment is not made, the policy lapses.
There are different kinds of life insurance that fall under the permanent life insurance category. These would include whole life insurance which is the most basic form of this kind of life insurance. Universal life insurance is another kind which has some flexibility with the insurance premium amount. There is also variable life insurance, which has an investment component.