Insurance - Their Differences and What it Means for You

Insurance has become a need these days instead of a luxury product. There are provisions to tweak or modify the insurance policy to suit every need.life insurance rates change from person to person. A person starting with his career will prefer a lower premium amount. It also depends upon the type of insurance plan opted. Following are the difference between the two:

- It is the insured that will be benefitted, in the first go, as this would give him the freedom to enjoy his money after the duration of the insurance is over. However, the amount would be given to the beneficiaries in a life insurance.

- An endowment plan has higher premiums than a life insurance plan as it matures after a specific time, providing for a shorter time span than the latter. Life insurance rates stretch for the entire life span of the insured, making the premium paying time longer, and thus, allowing for premiums to be slightly less.

Even within the general term of life insurance, there are different plans to suit different people.

1. Universal Life Insurance plan allows you to make changes to the premium as well as the death benefits at any point of time. But making changes in the death benefits will require you to present additional proof of your good health.

2. The Whole Life Insurance is guaranteed to last throughout your whole life. It is, however, significantly more expensive than Term Life Insurance or Universal Life Insurance as it builds up its cash value as the years go on. The Whole Life Insurance also allows loans to be used during the insured’s lifetime. The sum borrowed against this insurance plan can be used for college tuition fees, to buy a first home or added to any retirement fund. Unlike the Universal Life Insurance plan, this plan features fixed premiums.

3. The easiest to apply, an insurance with low premiums is Graded Benefits Life Insurance. But with these advantages, there comes some disadvantages as well. The complete insurance amount cannot exceed $50000. The death benefits are also limited initially.

Another form of insurance is the term life insurance. These are used to address a specific need like Personal Accident, Travel, Fire, Car/Hire Purchase or Medical/Hospitalization. Unlike some life insurance, term life insurance rates do not change much and aside from the occurrence of death, there is no benefit for the insured. Just like any other insurance, however, it does recognize the insured’s beneficiary who will be the one to get the death benefits.

As they are intended for a specific, relatively short time, term life insurance rates are fixed premiums that do not increase in value over the years. They are often regarded as the most inexpensive way of getting sufficient coverage for an important, immediate need. Once that term expires, the insured does not receive any cash claims for the so-called unused insurance. In fact, the opposite happens - the insured often renews the insurance for another term under the same conditions.

Term life insurance rates for specific types can actually decrease with the years. One good example is auto insurance – as the vehicle’s hire purchase loan decreases in its debt balance, so does its insurance.

Term life insurance is considered to be the original form of insurance since it is free form cash value and there is no investment-linked or loan attachments. It is meant to serve the actual purpose of an insurance.