Life Insurance and its Five Types

Therefore, just to make your decision easy below are the five basic types of life insurances that you can choose from-

  1. Term Coverage Plan- This type of policy provides you protect from uncertain mishap for few set of years as stated in the plan. The premium that you are asked to pay remains stable throughout the policy period. If you purchase term life plan, then be sure that you will get the policy benefit only if the policyholder dies within the set of years mentioned in the policy. In short, it is the most instant protection giving life insurance policy.

In fact, many of term indemnity plans provide you facility to renew your policy term years. However, as many times as you will renew, the premium will increase. Similarly, few of the term insurance can also be converted into whole life insurance plan but again you need to pay high premium.

  1. Whole Coverage Plan- It is the type of life policy that makes sure that your family is protected after your death no matter when you pass away. It is the most common kind of indemnity where you need to pay same premiums for lifetime. However, the premium of whole life insurance is much higher than term plan, but still it is cheaper than renewing your term plan often.

You can buy online life insurance policy or through an agent. Few of insurance policies allow you to pay all your due premiums in shorter period, say for 20 or 30 years or till you are 60. However, then you need to pay high premium every month as insurance company needs to cover all premiums in less time.

Even though premium of whole indemnity plan is bit more as compared to term plan, still there is one advantage. It provides you cash value so, even when you discontinue paying your premium, you can use the cash in cash value account for other purposes or to purchase new insurance.

  1. Variable Coverage Plan- It gives you lifetime security and several benefits to your family after your demise. However, depending on the profit of the investment of your insurance plan, the demise benefits may oscillate often. Though, many variable coverage plans ensure that the policy amount won’t decrease more than a specified amount that was promised to you at time of buying. Therefore, we can say it is a type of permanent life policy but with many risks involved.
  2. Universal Coverage Plan- It is distinction of permanent life policy. Here, your insurance amount is kept aside from your investment amount of the plan. The investment amount of plan is invested in mortgages and other market trust funds. In contrast to whole indemnity plan, the cash value in under universal coverage plan keeps growing and the nominee is paid from cash value account only. Even if your policy investment turned out badly, you will be given a promised interest rate.
  3. Variable-Universal Coverage Plan- In this your nominee will obtain certain benefits after you death. The performance of investment determines the benefit of the plan. It provides you more power on cash value. Even if the investment falls short, still you will be provided the promised interest rate.