Let us take a look at some of the better known life insurance policies. This is a site about life insurance answers, right? I think you would naturally want to know how they work. Here I will give you a basic overview of the most sought after policies.
I will begin with the least costly term life insurance policies and progress through to the permanent policies. When you are through reading you will make a better decision as to which policy to buy.
Yearly Renewable Term Life Insurance
Decreasing Term Life Insurance
5 Year Term Life Insurance
10 Year Term Life Insurance
15 Year Term Life Insurance
20 Year Term Life Insurance
25 Year Term Life Insurance
30 Year Term Life Insurance
Term Life Insurance To Age 65
Universal Life Insurance
Variable Universal Life Insurance
Whole Life Insurance
The Yearly Renewable Term
One of the more interesting of term life insurance policies is the yearly renewable term. You begin with an extremely low premium but your costs increase every year even though your death benefit remains level throughout. The reason for the increase in cost is that this policy is somewhat like you are buying a new term policy each year. The older you are the more life insurance costs, thus your increase in premium. Once you start the policy though you don't need to prove insure-ability again.
If you have life insurance to cover your mortgage in case of your death you probably have a decreasing term policy. It is usually bought in the amount of the mortgage and for the number of years that you will make mortgage payments. The face amount of the policy decreases as the amount owed decreases. This is a very inexpensive level premium policy.
5 Year Level Term
This policy, 5 year term, was designed for situations where your need for life insurance is short term. You want to be assured that a child or grandchild finishes college even if you should die in the interim. You have an outstanding bill that you don't want left unpaid if you should die. The death benefit is level and so are the premiums.
10 Year Term
The face amount of 10 year term life insurance policies remain level for the duration and so does the premium. Used for shorter term family needs or for business life insurance needs. It usually includes the right to convert to permanent life insurance, within a specific number of years.
15 Year Term
This policy, 15 year term, can also be used for family protection or for business. It has a level death benefit and level premium.
20 Year Term
This is probably the most bought term life insurance policy for obvious reasons. You have a family, 20 years is usually a reasonable period of time to make certain that the family is protected. The conversion privilege allows you to convert to a permanent policy if you become aware that you may need coverage for a longer period of time. It usually has a level death benefit as well as a level premium.
25 Year Term
25 year term insurance is usually a good choice for young married couples. They are likely to plan on having children. the life insurance will be needed until the youngest graduates college. This is also a level term policy.
30 Year Term
Some people look even further ahead. Take someone that wants to be certain that the spouse will be fine after death even after the children have graduated college, the 30 year term policy may be ideal. Premiums are level for the duration and so is the death benefit.
Term To Age 65
Most people think of age 65 as a good time to retire. These people want to protect their loved ones until that time. This is also a level term policy
Universal Life Insurance
This is one of those life insurance policies that combines life insurance, death benefit, and a saving plan. It has a term life insurance base.
Variable Universal Life
This policy combines investments with permanent life insurance. You get to choose where your money is invested. It could be in stocks, bonds, mutual funds or money market funds. These policies are only sold by prospectus. Be certain to examine it carefully. The agent or organization you deal with must have an N.A.S.D license to sell these policies.
Whole Life Insurance
This policy has a level death benefit as well as level premiums up until age 100 if you decide to keep it until then. It builds up cash values over the years as well as dividends. There are several dividend options to choose from. It is important to note that dividends are not guaranteed.
This, in a nutshell, are some of the life insurance policies offered by most of the larger carriers. Take a look at a page on life insurance policy provisions.
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