The Various Types of Life Insurance Made Easy

The Various Types of Life Insurance Made Easy

Thinking of buying life insurance, but not sure where to start? Here are a couple of things to know before you even get on the market.

Life Insurance

Life insurance is designed to replace income that is lost when the breadwinner dies. It can also be used to pay for the special needs of your family such as payment for college or for mortgage. If you are the breadwinner of your family, then it's a good idea to get something like it. It's also a good idea if you are near retirement.

The next question you might ask is what type of insurance should you buy? You will find out the answer to that by calculating how much it would take to financially support your family in a year in case something were to happen to you.

Types of Life Insurance Simplified

This kind of policy is the simplest form of insurance. It allows you to purchase coverage for the least amount of money, and provides coverage for a particular period or term. It is considered the most common type of life plan.

Term universal life insurance, on the other hand, is a hybrid, and offers more flexibility when compared with a term policy. This policy lets you extend the term of the policy, and the policy can be customized to fit your current financial state.

Whole life is a policy that covers you for your entire life, as long as you stay current with the payments. Whole life coverage is more expensive when compared with the term policy, but part of the premium will be set aside in an account designed to cover the cost of the premium as you age.
Blended life insurance policy starts as a combination of term coverage and permanent coverage where future payments are used to convert the term coverage into a permanent coverage type of plan.
Universal life provides coverage for the person, as long as premiums are paid. This also has an investment component. Beneficiaries either receive the full value or full value plus the cash value of the investment component or account. The value can rise or fall depending on the value of the investments.

Finally, there is variable life, which offers more investment options, which includes stocks bonds and other mutual funds. Similar to universal life, the face value will rise and fall with the value of investments.

The important thing is to know what you need from a simple term or 10 year life insurance or a whole life plan. It's a matter of what you need, or it all boils down to the amount that can sustain your family in case of your death.
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