Types of Life Insurance

Life insurance is a risk management cover against the loss of a person’s life. The insurance company agrees to pay a specific amount of money when the said risk occurs. Here we say that the life insurance policy has reached maturity.

Life insurance may be divided into two major categories. The first category is known as temporary or term insurance. The second category is the permanent or whole life insurance.The term life insurance better known as term assurance gives a provision for life insurance coverage for specific number of years and at specified premiums. When you buy a life insurance policy therefore, your life is insured for the specified period.

If you die before this specified period, your beneficiary will receive the payment. If you die after this specified period, your beneficiary will receive nothing from the insurance company. The policy in this type of insurance is non-accumulative meaning it does not increase in cash value as time goes by.

The other category is the whole life insurance. In this type of life insurance, the policy remains active until maturity. This happens if the policyholder does not fail to pay any premiums when they are due. There are four types of whole life insurance. They include whole life coverage. This type of permanent life insurance will cover the insured for al the years they are going to alive. In other words, they are insured for life up to the age of 100 years.

This type guarantees death benefits, cash values, expense and mortality charges without reduction of the initial amount on the cover. The second type of permanent insurance is endowment insurance. This type insurance covers the insured only for a specific time span. The insured will get the payment when this period expires whether they die or live. It is similar to the whole life one but it matures rather fast.

The third type of whole life insurance is the universal life coverage. This type of insurance cover offers a degree of flexibility. Partly, the insurance premiums buy the insurance protection and partly they are an investment of the cash value of the policy.

The premiums here are easy to pay. The final type is the limited pay insurance. This type of insurance cover has premium pay periods of 10 years, 20 years and they usually mature at the age of 65.there is a specified period within which premiums are paid. After this no more premiums are paid. This is in essence to keep the policy active.

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